VAT ISSUES PRESENTED BY ANDREW NEEDHAM OF VAT

VAT ISSUES PRESENTED BY ANDREW NEEDHAM OF VAT SOLUTIONS (UK) LIMITED Chartered Tax Advisers

VAT ISSUES Due Diligence TOGC or not • Property rental – what constitutes the TOGC of a property rental business. Solicitors! • Properties in a normal TOGC of a business. • Must not be successive transfers – VAT Groups • Same kind of business • Part transfers – is it capable of separate operation. VAT SOLUTIONS (UK) LIMITED Chartered Tax Advisers

VAT ISSUES Share purchase and sale • Are you lead advisor – exempt services • Who is the supply to? Company or individual? • Carrying over existing VAT liabilities – watch the tax warranties. • CGS – what are you inheriting • VAT inspections do not give clearance • Overseas liabilities – warehouses, conferences, training etc VAT SOLUTIONS (UK) LIMITED Chartered Tax Advisers

VAT ISSUES Commercial Buildings • Sale of new commercial property (e. g. shop, factory, office) which is less than 3 years old is standardrated. • Sale of existing commercial property (more than 3 years old) exempt from VAT with the option to tax (subject to anti-avoidance legislation) • Rental of commercial property regardless of age is exempt from VAT with the option to tax (subject to anti-avoidance legislation) VAT SOLUTIONS (UK) LIMITED Chartered Tax Advisers

VAT ISSUES HOW TO OPT TO TAX · Can’t opt to tax dwellings, buildings used for a relevant residential purpose (old peoples’ homes, children’s homes) and buildings used for non-business charity use. · Must notify HMRC in writing within 30 days of making the election – but you can make a belated notification. · An option can also be revoked 20 years after it was made. · If you have already made exempt supplies of the property you must ask Customs’ permission to opt to tax. VAT SOLUTIONS (UK) LIMITED Chartered Tax Advisers

VAT ISSUES · · · OPTION TO TAX - PLANNING POINTS Deciding when to opt to tax a property is important. In the case of a freehold sale, you have to opt to tax before you make the sale - you can’t opt to tax retrospectively. If you are letting out a building to a tenant and charging exempt rentals, and decide that you want to refurbish and perhaps sell the building, you would want to opt to tax before beginning the refurbishment and marketing of the building. By opting at that stage, you would protect the input tax you incur. VAT SOLUTIONS (UK) LIMITED Chartered Tax Advisers

VAT ISSUES · · · If you don’t believe that your VAT expenses in respect of the letting or sale of a property will be high, you may decide that opting is not necessary, especially if you have a prospective tenant or purchaser who would not be able to recover VAT such as a bank or insurance company. As deciding when to opt is very important it is best to get advice on this matter at the earliest opportunity when considering supplies of land buildings. If you come across surrenders and reverse surrenders get advice! VAT SOLUTIONS (UK) LIMITED Chartered Tax Advisers

Seek early advice • Property transactions • Overseas trade • TOMS • Second hand Schemes • Partial exemption • VAT Groups • Change of VAT number VAT SOLUTIONS (UK) LIMITED Chartered Tax Advisers

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