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bigduckontax
bigduckontax, Accountant
Category: Tax
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I am trying to buy NURSING HOME. The seller says that

Customer Question

Hi,
I am trying to buy NURSING HOME. The seller says that I have to pay VAT top of the asking price. My company not registered for VAT. Therefore I do not reclaim VAT.
I thought Nursing Homes are VAT exempted.
Please advise me.
Thanks
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Nursing homes are only exempt from VAT in the following circumstances [VAT Notice 701/31] 'Care or medical treatment provided by a qualifying institution like a hospital, hospice or nursing home' Thus the sale of the building would not come within this definition and the selling price could have VAT applied at 20%. VAT Notice 742 advises that only the following supply is zero rated: 'Freehold sale or long lease in new dwellings, communal residential or relevant charitable buildings by the person constructing' However VAT Notice 709 holds that: 'Sale of land and buildings as part of a transfer of a going concern [is] not a supply for VAT purposes. However this is not quite so clear cut as it seems. I would be inclined at this stage to challenge the vendor's approach and ask him for his statutory authority for his charge. Of course, if you are not buying the nursing home as a going concern then the application of VAT appears appropriate. I am so sorry to have to rain on your parade.
Customer: replied 2 years ago.

I am not clear still , are you saying that if I am buying going concern business including land and building as freehold then I do not need to pay VAT?

I have bought care home before and never paid VAT in the purchase price. Also I am not registered for VAT as well. Please advise me

Thanks

Expert:  bigduckontax replied 2 years ago.

HMRC state in VAT Notice 709 that:

'Sale of land and buildings as part of a transfer of a going concern [is] not a supply for VAT purposes.'

It follows that if indeed you are so buying the sale is outside the scope of VAT. However if you are not buying the business with the property there can be occasions where the vendor must impose VAT at the standard rate on the purchase price. This can happen, for example, when VAT has been charged on rentals.

The current turnover threshold for VAT is 82K in any one year, that includes the sum of standard, reduced and zero rated supplies made, but not exempt supplies.

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Expert:  bigduckontax replied 2 years ago.
Thank you for your support.