TOGC and VAT

[doobrey]

I am looking quite seriously at buying a commercial property, which would be my first one. It is elected for VAT so it would be critical to structure the purchase such that VAT was not payable on the purchase price.

As such my understanding is that it must be done as a Transfer Of a Going Concern. I would propose to buy as an individual and see no particular reason, from a tax perspective, to use a Ltd. company. Leaving tax issues aside, for a TOGC am I correct in thinking that:

(1) There is no requirement for the purchaser to be a Ltd. company?, and if so
(2) I, the purchaser, must register for VAT? (I am not at the moment)

[doobrey]

I asked this on a tax forum. From response there, plus general research, I would answer my own questions as follows:

(1) The purchaser can register for VAT as an individual, with no need to be a Ltd company.
(2) The purchaser must register for VAT (or 'become liable to register for VAT') before the relevant date. This is one of the two purchaser requirements for TOGC - the other being opting to tax.

'Relevant date' will typically be exchange of contracts but would be sooner if a deposit was paid prior to this, which has been known to trip up the unwary.

[rentreviewspecialist]

As I understand, it is the property that would be registered for VAT (opted for tax), not the seller or purchaser.

[doobrey]

By opting to tax, the buyer becomes responsible for charging VAT. Therefore it follows that they have to register. If any doubt exists on this point it is stated in e.g. VAT Notice 700/9 para 2.2.4:

Where the seller of the business or part of the business is registered for VAT, the buyer must be one of the following:

* Registered for VAT
* At the date of the transfer be required to be registered for VAT because all of the conditions for compulsory registration are met
* Accepted for voluntary registration and the voluntary registration must be in place at the time that the transaction occurs, it is not enough to apply afterwards for backdated registration

https://www.gov.uk/guidance/transfer...-7009#section2

[rentreviewspecialist]

Thank you. I was skipping a stage. Yes, the person that must be registered for VAT but it is not compulsory for every property that belongs to the person to be registered for VAT.

[doobrey]

Something else I have learnt from this process is the requirement for completing VAT5L.

https://assets.publishing.service.go...d_property.pdf