VAT Please help

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:25AM in AAT student discussion
If a sole trader is registred for VAT and sells his shop

he then buys a lease on a new shop,

does he need to cancel the old VAT number and apply for new or he must continue with the old number.

Please clerify on TOGC (transfer of going concern) as well.
ANY ADVICE WILL BE MUCH APPRECIATED.

Would someone owning the freehold of a property, charge VAT when trasferring it as a lease.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT Please help

    If the sole trader wants to keep his old VAT number, this is possible. What he must do is fill in a VAT 1 form (Application for Registration) - even though he is already registered - and a Form VAT 68 (Request for Transfer of VAT Registration Number). These forms can be downloaded from the HM Revenue and Customs website. The forms are simple to fill in. it is common to keep VAT numbers if the same person is simply transferring the legal status of a business or moving the business for whatever reason.

    VAT on the lease can only be charged if there is an option to tax on the building. This is quite a technical area and there must be an option to tax if VAT on the lease is to be charged. Applications for an option to tax cannot be reversed e.g. if a landlord decides he no longer wishes to charge VAT - this is not possible once an option to tax is in place. As this is a technical area, your best bet would be to contact HM Revenue and Customs should the owner of the freehold want to charge VAT and
    therefore wish for an option to tax to be in place.
    Regards
    Steve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:VAT Please help

    The reason for opting to tax a building is to allow the VAT on the expenses that relate to the leasing of the property to be recovered, including any VAT on purchase. The average VAT registered tenant should be neutral, as the VAT on the lease is a timing difference rather than a cost. The decision is for the landlord. I would certainly recommend that you take advice although in my experience asking HMRC for this type of assistance is less than useful. Speak to your accountant, if you have one.

    TOGC, both parties should be VAT registered at the time of the transfer and what is transferred should be astand alone business not just assets. If the deal qualifies it is 'outside the scope' of VAT and none should be charged on any aspect of the deal.

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