Selling your business premises – beware of the VAT implications

When you purchased your current business premises you reclaimed the VAT included in the purchase price. Now you’re moving to larger premises and are selling the old property. Nicola Roby, Director, looks at how you should handle the VAT.

VAT on the purchase of buildings

If you are buying a commercial property which is neither VAT exempt nor being sold as part of a business, the seller must add VAT to the price. If you are VAT registered and intend to use the property for a business that makes only VAT related supplies, you can reclaim the VAT charged by the seller. Straightforward so far, but things can get complicated if you sell the property at a future date.

You would imagine that if you sell a property (other than as part of your business) on which you reclaimed the purchase VAT you must charge it on the sale price. However, that’s not the case. The purpose to which the buyer will use the property is a key factor.

In summary

If you sell a property within ten years of purchase which cost you in excess of £250,000 and you reclaimed the VAT charged, you may need to repay some of it if the buyer intends to use the property for an exempt purpose. You may need to factor this into the price you charge or persuade the buyer not to exempt the transaction.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

DID YOU FIND THIS USEFUL?

Share it with your network:  

Want more great content?
Sign up to our newsletter

Follow us

Tweets by @CHW-accounting

CHW-Accounting
@chw-accounting


Twitter: chw_accounting

WHAT'S THE NEWS?

Grab a biscuit and a brew and read our latest news.

4 August 2020

‘Amnesty’ if you’ve claimed too much from the Coronavirus...

by

The Government has published further guidance in respect to compliance and the Coronavirus Job Retention Scheme (CJRS), with specific guidance for businesses who find they have…


Read more >

3 August 2020

Further details of Job Retention Bonus unveiled

by

Following the Chancellor’s announcement on 8 July of a Job Retention Bonus, the Government unveiled further details of the scheme on Friday. Purpose of the scheme…


Read more >

30 July 2020

£20 million in new grants to boost recovery of...

by

Thousands of smaller businesses in England are set to benefit from £20 million of new Government funding to help them recover from the effects of the…


Read more >

22 July 2020

Free credit control review

by

Here at CHW, we are always looking at ways to increase our service offering to ensure that you continue to get full value for money and…


Read more >

15 July 2020

Mini budget highlights

by

Last week, Rishi Sunak pledged to “protect, support and create jobs” and get pubs and restaurants “bustling again” as he unveiled his ‘mini-Budget’ to kick-start the…


Read more >

YOUR CHALLENGES

No matter what your challenge is, we’ve probably dealt with it before.



Need an Accountant?

Get in touch >


Need an Accountant?

Get in touch >


Tax issues?

Find out more >


Tax issues?

Find out more >


Trying to grow your business?

We can help >


Trying to grow your business?

We can help >


Managing cashflow?

We can help >


Managing cashflow?

We can help >


Starting a business?

We can help >


Starting a business?

We can help >


Looking for funding?

Need help with funding? >


Looking for funding?

Need help with funding? >


Buying or selling a business?

We can help >


Buying or selling a business?

We can help >


Adopt the cloud?

We can help >


Adopt the cloud?

We can help >


What else can we do for you?

We can help >


What else can we do for you?

We can help >
CONTACT US

Get in touch, no hard sell, just a brew, a biscuit and a chat.