Andrew Needham looks at the VAT position on the purchase of commercial property.
To recover the VAT on costs associated with their commercial properties, the owners of most commercial property rental businesses have opted to tax their portfolios of property and would therefore normally charge VAT on the sale of a commercial property.
Transfer of a going concern provisions
However, the transfer of a business as a going concern (TOGC) is treated as ‘neither a supply of goods nor a supply of services’ for VAT purposes and if the sale meets certain conditions, the supply is outside the scope of VAT and therefore no VAT is chargeable. The TOGC provisions can apply to the sale of an opted commercial building, provided certain conditions are fulfilled.
The basic conditions for a TOGC are:
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an entire business or a part
