Reply To: Selling public house

Forum Categories VAT ON PROPERTY TRANSACTIONS Selling public house Reply To: Selling public house

#56156
Trevor S
Participant

742 is HMRC’s published guidance on land and property. It’s available on their website here: https://www.gov.uk/guidance/vat-on-land-and-property-notice-742

By default, sales of land and property are generally exempt. However (subject to meeting various conditions), the owners can opt to charge VAT. This is often done with commercial property, as it allows the sellers to reclaim any VAT that they incur on their costs, and the buyer can reclaim the VAT charged on their VAT return.  Presumably this is what the pub company did.

Once a property has been “opted”, any sales of it by the person who made that option become subject to VAT. So perhaps the first question is who technically owns it at the moment?

If the property now belongs to you, in my opinion as you haven’t opted to tax it, your sale would be exempt from VAT.

However, if it still belongs to your father’s estate, I think that you need to establish whether he ever opted to tax it. If he did, the option to tax would probably still apply even though his VAT registration has now ended. See section 2.7 of HMRC notice 700/11: https://www.gov.uk/government/publications/vat-notice-70011-cancelling-your-registration/vat-notice-70011-cancelling-your-registration

I suspect that your father may not have opted to tax at the time of purchase.  If he had, his purchase would probably have fallen within “Transfer of a Going Concern” rules – and he wouldn’t have been charged VAT by the pub company, despite them having opted.  But I can’t be 100% certain of this – and even if he didn’t opt to tax at the time of purchase, he may have done later.