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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15838
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My daughter are ‘Tenants in Common' with equal shares in a

Customer Question

My daughter are ‘Tenants in Common’ with equal shares in a lease on an independent ‘lock up garage’ i.e. it is in a row of garages that are not part of or near where they live.
The sale of a lease on an independent garage is a VATable – ref section 4 in https://www.gov.uk/government/publications/vat-notice-742-land-and-property/vat-notice-742-land-and-property
Normally if a private individual sold the lease on an independent garage for more than the VAT limit of £82,000 they would have to charge VAT.
My question is – as they are ‘Tenants in Common’, if they sold – do they have to charge VAT if the sale price is more that £82,000 or 2 * £82,000 = £164,000.
I.e – Would the VAT office look at it as one transaction or two?
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.

Hi.

See paragraph 7.2 of the VAT Notice 742 here. It is a single supply for VAT purposes. Your daughters won't each benefit from an £82,000 threshold I'm afraid.

I hope this clarifies the situation for you but let em know if you have any further questions.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15838
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.

Thanks for you clear reply - I should have seen that! - I will pay for your question now.

I have another question that I would be happy to pay again - if you can answer it.

Question is:

What happens if daughter 1 sells her 50% share in Tax year 1 to Buyer for say £80,000 and the Daughter 2 sells her 50% share to same buyer in Tax year 2 for another £80,000 - so £160,000 in total

Expert:  TonyTax replied 1 year ago.
That may work but, notwithstanding that your daughters own the garage as tenants in common so that each own a specific share, I suspect HMRC may invoke Section 6.5 of VAT Notice 700 here after the second sale if not before.

It seems to me that HMRC would argue that an pre-ordained arrangement to see the two equal shares to the same individual separately would be seen to exist to avoid the VAT and as such may be construed as aggressive tax avoidance. Jointly owned land is treated as a partnership even if one does not formally exist so paragraph 7.5 of VAT Notice 742 will see each disposal as a by each of the owners.

It's a difficult one and I have to say I'm not sure. I willhave to a bit more research but I'm leaning towards the anti-avoidance rules being invoked.
Customer: replied 1 year ago.

Thanks for good reply - I will try leaving another excellent rating and hopefully that will mean you are paid twice

Expert:  TonyTax replied 1 year ago.
It's all part of the same topic so you need not pay again.

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