When you buy, sell or let property it is critical to consider the VAT implications and ensure that you include the appropriate wording in the relevant contract for sale or lease to manage your VAT position.
Revenue have recently updated their guidance on the application of transfer of business provisions to property transactions. Before this change where a VAT registered purchaser was purchasing property, which had previously been let then transfer of business generally applied. Accordingly, if the property was “new” VAT was deemed to have applied on the sale price and if the property was an “old property” the purchaser took over the remaining VAT capital good obligations of the vendor.
The new guidance requires that there is a current letting or agreement for letting for transfer of business to apply. If the property is vacant on sale then transfer of business may not apply and further analysis is required to determine if VAT is chargeable, the sale is exempt or if a joint option to tax the sale should be sought.
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