VAT, Property and Off the shelf company

[Anonymous]

Hi,

Could anyone help…

a client owns a small office building, which it purchased 7 years ago. The client is now considering selling the building to a registered dentist and is looking to structure the sale in a VAT efficient manner. The client has asked to consider whether it would be benefical to put the property into an off the shelf company and then sell the company to the dentist.

[Marie Stein]

Hi Karen

Apologies for the delay in replying – I’m just getting up to date after cleaning the site up after the spammers plus the holidays.

I assume that the reason for the query is because the dentist won’t be able to recover any VAT charged? I suppose that it would be possible to transfer the building into a new company, but there may be a VAT charge on the transfer to the company, plus you’d have to consider whether the new company would inherit the existing owners’ VAT liability – eg capital goods scheme adjustments etc.

Unfortunately it really isn’t possible to give general planning tips on such issues. Property transactions are among the most complex and require detailed knowledge of the parties involved, the VAT history of the property and the intentions of the purchasers. The intention of the VAT legislation is to ensure that exempt businesses such as dentists can’t recover input VAT, so trying to get around this is difficult and certain practices can be regarded as avoidance and must be notified to HMRC.

I’d be happy to have a no-obligation discussion with you about this to see it there is anything that could help. If you’re interested, send me your contact details and a bit more information about the property to enquiries@vatexchange.co.uk and I’ll give you a call.

Marie

[Author]

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