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Where Taxpayers and Advisers Meet

Commercial property purchase as a TOGC

doobrey
Posts: 2
Joined: Fri Sep 06, 2019 8:46 pm

Commercial property purchase as a TOGC

Postby doobrey » Fri Sep 06, 2019 9:17 pm

I am close to buying a commercial property (A3) as an investment. It is tenanted with 12 years remaining on the lease. I propose to purchase as an individual. It is elected for VAT.

If this goes ahead - which seems likely - it will be very important that it is structured as a Transfer Of a Going Concern so that VAT is not due on the purchase price. I understand that the main action items for me would be to register for VAT and exercise the option to tax. To confirm, it is not necessary to be a company in order to do this? I could register for VAT as an individual?

Other than that, any particular pitfalls to watch out for?

TIA.

DrTax
Posts: 1
Joined: Sun Sep 08, 2019 3:58 pm

Re: Commercial property purchase as a TOGC

Postby DrTax » Sun Sep 08, 2019 4:00 pm

The transferee can be any VAT registered person, no need for it to be a company

doobrey
Posts: 2
Joined: Fri Sep 06, 2019 8:46 pm

Re: Commercial property purchase as a TOGC

Postby doobrey » Thu Oct 24, 2019 1:42 pm

Thanks DrTax. I am proceeding with this as an individual rather than a Ltd.

I am in the process of registering for VAT. Satisfying the requirement of being registered at the point of exchange of contracts seems difficult to guarantee. For one thing, "the date of transfer you [specify] must match the date provided to HM Revenue and Customs (HMRC) by the previous owner of the business", which means that this date relies on the other party. Also I understand from HMRC that my VAT registration will not take effect until the transfer date i.e. it cannot start in advance, which suggests no margin for error or uncertainty.

According to the TOGC rules, it is imperative that the buyer is registered for VAT or "becomes liable to register for VAT" on the relevant date, for a TOGC to occur. Is the "becomes liable to..." the saving grace here? Does this mean that the buyer need not actually be registered on the date of exchange of contracts?


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