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Transfer of property to parent company

Does VAT need to be charged

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Factory is to be transferred from wholly owned subsidiary.  The holding company is involved in no other activities and, as such, the companies are not in a VAT group.  Does VAT need to be charged on the transfer of the property to the holding company.  There will not be any changes of ownership for many years, if at all, so no issues in that regard.  Any advice or a point in the right direction would be appreciated.

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12th Jun 2019 11:09

The basic principle is that existing land and buildings are exempt from VAT (which means that you cannot recover input tax on fees incurred in connection with the sale). However there is an option to tax.

You might want to look at VAT notices 742 and 742A which explain in detail.

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12th Jun 2019 15:01

If the property is not "new" (broadly, less than three years since construction was completed) and not subject to an option to tax the transfer is an exempt supply.

If the contrary is true it's a VATable supply of land and buildings.

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By DJKL
12th Jun 2019 15:37

Do also consider if Capital Goods Scheme bites.

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