VAT on Sale of Commercial Buildings
When purchasing or selling a commercial property one of the first things to establish is whether VAT will be applied to the price of the property. Land and buildings are generally exempt from VAT, but ‘new‘ commercial property (i.e. less than three years old) will have VAT applied. Otherwise VAT should only be charged on the sale of a commercial property where the seller has previously elected to apply VAT to the property. This election is known as the ‘option to tax‘.
There are circumstances where the option to tax may be disapplied by the seller, such as where the purchaser is going to use the building solely for charitable purposes or the building will be converted into residential use. If there is any question that VAT should not be applied to the sale, the seller must ask the purchaser for written confirmation of the intended use of the building.
When the purchaser plans to convert the building to residential use it must provide the seller with a VAT certificate (form VAT1614D) to confirm their intentions for the building. In other circumstances a written instruction from the purchaser should be sufficient.
Where VAT is applied to the price of the building, the stamp duty land tax (SDLT) charge will inevitably be higher, as SDLT is charged on the gross consideration paid, including the VAT charged. If you are planning to purchase a commercial property, or sell one, ask us to check the VAT implications before the price is agreed.
What expenses can I claim as a Ltd Company?
Limited Company expenses The rules for deciding what business expenses can be deducted from your profit for tax purposes can be quite complex. The importance of claiming all your allowable business expense deductions cannot be overstated. When a limited company claims allowable expenses, they will reduce their profit which in…
Pros and cons of a Sole Trader vs a Limited Company
Are you thinking of setting up your own business? For many would be entrepreneurs the idea of starting a business can be a life changing experience. There are many important issues to bear in mind when you consider how to start a business. Before embarking on starting a new business…
Win a year of Accountancy and Insurance
We’ve teamed up with our partners Create Insurance to offer people in the creative industry the chance to win a year’s worth of insurance and Accountancy services. 2020 was a tough year for freelancers in the creative space, so we’re hoping we can get 2021 off to a better start…