VAT on Property Purchase

acsacsacs Registered Posts: 43 ? ? ?
Do we have any experts regarding a property purchase and how to treat the VAT element?

A client I aquired about 9 months ago is currently looking to purchase property/land for around £400,000 with potentially £80,000 VAT due.

The client's business is VAT registered and all work undertaken is at the standard rate.

The bank, who are helping to finance the project, have offered a VAT bridge for the £80,000 but need me to confirm the VAT situation in writing. (Something I would rather have assistance with).

The client has also been told that if the property is bought by the owner privately they can opt out of the VAT element.

Is anyone here able to help advise regarding this? I am willing to pay for advice etc. in order to ensure the correct advice is given.



  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    Is this commercial property or residential? What is it's use to the business buying it?
  • acsacsacs
    acsacsacs Registered Posts: 43 ? ? ?
    Cheers T.C.

    It's for a commercial property. It's use will be for offices and for storage.
  • T.C.
    T.C. Registered, Tutor Posts: 1,448
    Is the company not VAT registered then?
  • stevo5678
    stevo5678 Registered Posts: 325
    I understand that if the seller is charging vat then he or someone along the line already opted in so must add vat onto the sale.

    It's not simple the as it's a complicated area.
  • villapb
    villapb Registered Posts: 357
    The seller when opted in to reclaim vat on expenses accurred then cant opt out to sell the property.
    The buyer will have to pay the vat element but if vat req will claim it back and pay off loan the banks love this short term business as the interest is usually good for the bank. The seller then later on opt out if they think they wont be accurring vatable expenses on the property or sells on the property, the property needs to be sold as a going concern also.
  • villapb
    villapb Registered Posts: 357
    Your option to tax will not apply if you supply a building, or part of a building, that is designed or adapted and intended for use as a dwelling (such as a house), or as a number of dwellings (such as a block of flats). We recommend that you retain evidence to show that the building is intended for use as a dwelling or number of dwellings. Notice 708 Buildings and construction explains what is meant by 'designed as a dwell.
    So as this is commerical in this case........ vatable..........we had a client who buys empty pubs and demolishs them to build the going concern ends not vatable.
    The property on this example is straight forward really............and the bank
  • villapb
    villapb Registered Posts: 357
    The property should have cetification paperwork which would have also been needed as part of the sale so provide a copy to the bank with a covering letter with vat numbers also...........
  • deanshepherd
    deanshepherd Registered Posts: 1,809
    The bank just want you to confirm in writing that the VAT is reclaimable by your client so that they know they will get their £80k back as soon as the VAT refund comes through.
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