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VAT Liability and the Implications of Commercial Property Transactions
Thorogood Publishing, January 2011, Pages: 200
Plan for maximum advantage and avoid costly mistakes
Commercial property purchases have been subject to tax since 1989. This Report guides you through the attendant UK and EU legislation to provide an invaluable overview.
The essential principles of VAT and property are explained, followed by sections on liability relating to VAT on commercial property, on land, on transactions relating to leases and on transactions in which property is converted from residential to non-residential status. The Report also offers expert insight into the option to tax, tax avoidance, the Capital Goods Scheme and VAT recovery.
Reading Vat Liability and the Implications of Commercial Property Transactions will help you avoid the numerous pitfalls and traps that lie in wait for the uninformed commercial property purchaser or seller.
What are the benefits of this Report?
- Offers a clear and comprehensive overview of a complex subject.
- Contains key planning points, tips and techniques.
- Shows you where the traps and pitfalls lie and how to avoid them.
- Provides guidance on VAT liability and accounting issues.
- Written by a VAT expert and former VAT Inspector.
Who should read this report?
This is an essential report for the non VAT specialist involved in property transactions either as an investor, occupier or professional advisor
1. VAT general principles
- The VAT regime
- VAT legislation
- Rates of VAT
- Scope of VAT
- Output tax
- Input tax
- Time of supply
2. VAT Liability of Commercial Property transactions
- UK legislation
- European legislation
- Exceptions from exemption in the UK
- Freehold sales of commercial buildings or civil engineering works
- Definition of an RCP building
- Gaming and fishing rights
- Hotel accommodation
- Holiday accommodation
- Caravan and tent pitches or camping facilities
- Parking facilities
- Sports facilities
3. Land and licence to occupy land
- Definition of land
- Scope of the exemption for land and buildings
- Immovable property
- Licences to occupy
- Licence to use facilities
- Customs’ examples
4. Option to tax
- Why opt?
- Commercial considerations
- Interaction with stamp duty land tax
- Option ineffective
- Scope of an option to tax
- Who can opt?
- How is the option exercised?
- Real Estate Elections (REEs)
- Global options
- Option to tax – national unit
- Problems with notifications/acknowledgements
- Adding VAT to rents
- Informing tenants
- Subsequent works
- Is an option valid?
-Permission to opt regime
- Revocation of an option
5. VAT on transactions relating to leases
- Lease surrenders
- Variation of the terms of a lease
- Reverse premiums
- Assignment of a lease
- Dilapidation payments
- Rent free periods
6. Calculating recoverable VAT in the property sector
- Partial exemption
- Standard partial exemption method
- Annual adjustment
- Special methods
- Partial exemption de minimis limits
- VAT recovery – change of use
- Abortive and speculative developments
- Recovery of VAT prior to an option to tax
7. Capital Goods Scheme
- Why have a Capital Goods Scheme?
- Application of the scheme
- Additions to the scheme
- Definition of a capital item
- Where CGS does not apply
- Initial VAT recovery
- CGS effect on other disposals
- Record keeping
8. Transfers of going concerns
- The UK legislation
- Consequences of TOGC treatment
- Seeking Customs confirmation
- European dimension
- Interaction between the TOGC and property rules
- Relevant date
- Customs’ views
- TOGC benefits
- A capital goods scheme issue
- Recovery of VAT on costs of TOGC transactions
9. VAT avoidance
- Option for VAT planning
- Customs efforts to combat avoidance
- Anti-avoidance legislation
- Disclosure rules
10. Conversion to dwellings and RRP buildings
- Examples of conversion from non-residential
- Disapplication of the option to tax
- Relevant residential purpose
11. Option to tax – past, present and future
- The past
- The present
- The future
- Schedule of VAT 1614 series
- Ten tips and ten traps
Tim Buss, has been involved with VAT for over 35 years. He joined HM Customs & Excise (now HM Revenue & Customs) in 1973 and was a VAT inspector and classroom trainer. He left in 1989 and worked as a VAT consultant for a top ten accountancy ?rm (PKF) and was appointed director of VAT services. Tim advised businesses on all aspects of VAT. He joined BDO in 2000 as VAT director. Tim has represented clients at several high pro?le VAT Tribunals, including SEH Holdings.
In 2005 Tim formed his own VAT training and consultancy company. He provides training courses for Quorum Training and the Association of Accounting Technicians, as well as bespoke courses for businesses. In addition to lecturing on a variety of VAT topics, he regularly writes on VAT matters and has written a book on VAT and property.
Tim is an associate of the Institute of Indirect Taxation (IIT). He is a former IIT Council member and was the IIT’s director of education for three years