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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I Purchased a commercial unit in 1992 to run a metalwork business. I

Resolved Question:

I Purchased a commercial unit in 1992 to run a metalwork business.
I Paid VAT.
I am selling the unit and the purchases solicitors say I should not charge VAT on the sale.
I am closing my business. Will I have to pay VAT on the sale when I deregister VAT.
We have communications with HM Revenue and Customs stating that "We do not appear to have been notified of an option to tax on the Property.
In July 2004 we let the unit out and charged VAT.
The unit is not let to a company who will not pay VAT and are in the process of selling with the tenants on.
At a future date will I have to pay VAt on the sale of the property?
Kind eegards
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Supplies of land and buildings, such as freehold sales, leasing or renting, are normally exempt from VAT. This means that no VAT is payable.

However, you can opt to tax land. For the purposes of VAT, the term ‘land’ includes any buildings or structures permanently affixed to it. You don’t need to own the land in order to opt to tax. Once you have opted to tax all the supplies you make of your interest in the land or buildings will normally be standard rated.

Based on what you have stated, you had not opted to tax land notwithstanding the fact your business is VAT registered.

The solicitor is right in saying you don’t charge VAT on the sale price as it is evident from your communications with HMRC.

You will not have to pay VAT on the sale of the property, based on facts provided.

More information on this can be found here (Sections 1.3 and 2)

https://www.gov.uk/government/publications/vat-notice-742a-opting-to-tax-land-and-buildings/vat-notice-742a-opting-to-tax-land-and-buildings

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

Thank you that it a great help. Obviously we have not had a good accountant.

We had a worry that we would have to pay the VAT man £30,000.

You prompt reply has been much appreciated.

Kind regards

Expert:  taxadvisor.uk replied 2 years ago.
Teresa, thank you for your reply and your good words.

If you are happy and there are no more issues I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it.

Customer: replied 2 years ago.

I have now rated you service as excellent

Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.

Best wishes.

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