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What are the VAT risks when investing in Commercial Property? [Series: What the VAT?]

Commercial Property, as an asset class, makes an attractive investment option for many people. Larger businesses can have subsidiary companies that buy property investments to rent back to their own trading operations, and business owners can use their pension funds to acquire property investments that support their trading companies’ growth.But what are the VAT risks when investing in Commercial Property?

Is VAT applicable when selling or leasing a Commercial Property? [Series: What the VAT?]

There are two key areas that determine if you have any VAT issues to manage for your commercial property: 1) How did you use the property? and 2) How will the buyer use the property? To determine whether your commercial property is exempt from VAT or not when selling or leasing, there may be several factors to consider.

Option to Tax: Common Myths Debunked [Series: What the VAT?]

There are a few facts about Option to Tax that are worth setting out. Is it optional? Can it be easily revoked? Do HMRC need to be notified? Find out more about the Option to Tax as we look to debunk the common myths about the tax election related to commercial property.

Option to Tax for commercial property: What you need to know [Series: What the VAT?]

As a general rule, owners cannot charge VAT when selling their property, and landlords cannot charge VAT when renting it. This is because the default VAT position of Commercial property is Exempt. If a property owner wishes to change this, they can make a tax election called the Option to Tax.  Essentially, the landowner promises to charge VAT on all rental income, and/or the sale of the property itself, for at least twenty years.

Can you claim VAT when buying or leasing a commercial property for your business? [Series: What the VAT?]

Most businesses need a place from which they can operate.  Consequently, they interact with the property market in some way. Normally this is either by buying, leasing or renting a premises from which they can do business.  

The cost of acquiring real estate is substantial; it is common for the purchase price, or total of rent payments, to be many thousands of pounds.  At the current 20% VAT rate, any VAT can easily be tens of thousands of pounds in its own right.  Managing that cost, so VAT is either avoided or recovered, is normally key to ensuring a property deal is commercially viable.

Planning a VAT-free Christmas party menu

One constant about being an accountant or tax advisor at Christmas parties is people asking, “How do I save tax?” This always reminds me of a comedian who wondered why people at parties expected him to tell them a joke… but never expected his friend—a chef—to instantly bake a cake. This got us thinking about how funny the VAT rules around food are and how someone might try to plan the food at their party to save some VAT.