A Comprehensive VAT Guide for Commercial Property

The General Rationale of VAT

• Structure of VAT law and general principles
• Basic rule ‘unless’ an alternative treatment applies; the Courts’ view on interpreting exemptions and exceptions from exemption
• Obligations vs entitlements; the very different legal and procedural aspects
• HMRC’s powers to challenge a VAT treatment - output tax and input tax issues

The VAT Exemption for commercial property

• The scope of the exemption and evolution through the Courts
• Interest in, right over or licence to occupy land
• Grant, surrender and reverse surrender, what is the supply and who is making it?
• Sale & leasebacks (or lease & leasebacks)
• Freeholds, leaseholds, lettings and option agreements
• Barter transactions
• Specific types of property excluded from the exemption

The Election to Waive Exemption (the ‘Option to Tax’)

• Investment vs. development?
• Why Opt to Tax?
• The two-stage legal process, procedures and conditions
• Impact of Opting to Tax, legally binding, ‘cooling-off’ period & revocations
• Where the Option to Tax has no effect
• The power in the hands of a prospective buyer/tenant that can kill a deal
• Grant, surrender & reverse surrender
• Air rights & rights to light, whose Option to Tax?
• Overage

VAT registration issues

• Types of entity - company, LLP, LP, partnership, trust
• The concept of ‘Establishment’ and different VAT rules for non-resident businesses
• Acquisitions, sales, lettings
• Legal and beneficial ownerships
• When must you or can you register for VAT
• When you may want to register for VAT earlier than the law requires
• Effect of VAT registration on sales, lettings, suppliers and customers

Place of Supply of Services

• Basic rules and special conditions for property related services
• Reverse charges

Landlord & Tenant Issues

• Surrender or termination of a lease
• Tenant inducements
• Tenant fit-out works
• Lease variations
• Service charges

Partial exemption & the Capital Goods Scheme

• Basic principles of partial exemption
• Specific issues for property businesses
• The effect of the Capital Goods Scheme (‘CGS’), advantages and disadvantages

Share Sales vs Asset Sales

• The supplies for VAT purposes
• Different VAT treatments and effect on supplier & customer

Transfers of Going Concerns (‘TOGC’)

• What is a TOGC - legally and commercially?
• Obligations for transferors and transferees?
• When the respective interests do not coincide
• HMRC’s powers to challenge the VAT treatment

Redcliffe’s VAT & Commercial Property courses are delivered by a former VAT partner in a mid-tier accountancy firm.  He has a 41 year career in Indirect Tax including 10 years’ experience in HM Revenue & Customs followed by over 30 years in the accountancy sector advising clients on VAT issues, most recently as VAT Partner at Blick Rothenberg.  He qualified as a Chartered Tax Adviser in 1995 and has previously Chaired the Indirect Tax Sub-Committee of the Chartered Institute of Taxation and served as a Council member of the VAT Practitioners Group.

Although specialising in VAT for land and property, other areas of regular VAT work cover financial services, partial exemption, international supply chains, inward investment into the UK and resolving disputes with HMRC.

Away from work his interests include bridge, classic cars and restoring old furniture, as well as walks in the country and trying to recapture his youth down the gym!

This VAT & Commercial Property masterclass is for participants to understand the VAT issues that arise when buying, selling, developing or letting commercial property.

The course will include an examination of contractual issues that frequently affect the VAT position and where the reality of the situation, or ‘substance over form’, can lead to a markedly different (and often adverse) VAT position.  The aim is to enable participants to identify not only the correct VAT treatment of the transaction being undertaken, but pinpoint where problems might arise.

Where appropriate, the course will look at the VAT treatments from the positions of sellers, buyers, landlords and tenants, as well as agents and other affected parties. Although one’s own VAT treatment is always the prime concern, the aim of the course is to enable an insight into the consequences for other parties to the transaction and pre-empt commercial disagreements before they arise.   

This course on VAT & Commercial Property looks at the VAT rules in detail, the scope of the VAT exemption and when it does and does not apply, the many different commercial transactions and the evolving interpretation of VAT law in the Courts, illustrated by a variety of transaction examples and scenarios.  Pitfalls & bear traps are rife with the smallest details potentially causing problems for either the supplier or customer or both.

The advice given by advisers is likely to be different depending on whether the adviser is acting for the supplier or customer and the optimum solution is unlikely to be the same for both parties. This course looks at the VAT treatments from the view of all parties to a transaction overlaying this by reference to case-law where appropriate and commercial documentation including contracts, invoices and record-keeping.

This course is an essential part of developing knowledge for:

Tax and legal professionals advising clients on the VAT treatment of their transactions, particularly for those advisers specialising in direct taxes or contract law where VAT may not be their focus and for whom an awareness of VAT issues will add to their breadth of knowledge and identify conflicts between the various disciplines.

Management or ‘in-house’ staff in the property industry for whom an awareness of VAT issues will inform the initial plans for a development or new venture not least the early negotiations with suppliers, customers and counterparties.

Tax compliance staff looking to widen their horizons and have more informed discussions with clients.

Redcliffes Training’s VAT & Commercial Property course looks at the VAT treatment of commercial property investment, development and business transactions.  It looks at the VAT position of example transactions from the position of all parties and examines related issues such as contractual terms, HMRC challenges, and the ever evolving caselaw in this area.  Where relevant, the course also examines the various VAT compliance and reporting obligations that arise continuously from day one - a markedly different reporting position to direct taxes.