Essentials of Property
Taxation - Acuity Legal and
Kilsby Williams
18th
September 2014
Stephen Morris, Partner, Acuity
VAT/TOGC
• VAT and Transfer of a Going
Concern – Property Rental
Businesses
VAT/TOGC
•
•
•
Freehold sale of commercial building less than 3 years old or not
completed – standard-rated
Sale or grant of lease of commercial building 3 years old or more
– exempt subject to option to tax
If Transfer of Going Concern, VAT not charged
VAT
Property Rental Business
• Buyer to be VAT registered if Seller is taxable person and if
standard rated supply, Buyer must elect to waive, notify HMRC
and not revoke
• Rental Business to be in place before and to continue for period
after the sale
• HMRC Notice 700/9 and HMRC Briefings 30/12 and 27/14
VAT/TOGC
Some common questions
around “Property Rental
Businesses” and whether TOGC
is available
TOGC
•
Occupational Tenant is only holding an agreement for lease and
has not yet completed a lease
– Dartford Borough Council v Revenue & Customs (2007)
– Notice 700/9
VAT/TOGC
Members of the same VAT Group
• Paragraph 4 of Notice 700/9
• Transfer to same VAT group member is disregarded for VAT
purposes
• If seller or purchaser is same VAT group as the tenant, no TOGC
• If seller or purchaser is same VAT group as one tenant but there
are other tenants, may be TOGC
VAT/TOGC
Partly let properties
•
Paragraph 6.2 of Notice 700/9
VAT/TOGC
Lease is granted subject to occupational leases rather an interest
transferred
– Robinson Family v HRMC (2012)
– Substance is important
– HMRC Briefs 30/12 and 27/14
VAT/TOGC
Lease surrenders
•
Notice 700/9 revised this year – Brief 27/14 effective from 9 July
2014
Stamp Duty Land Tax
(“SDLT”)
Its application in overage
agreements, lease variations
and option agreements
SDLT
Overage agreements
• Estimate unascertained or
uncertain consideration
and then reconcile –
Sections 51 and 80
Finance Act 2003
• If not paid for 6 months,
apply to Birmingham
Stamp Office for
deferment of payment –
Section 90 Finance Act
2003.
SDLT
– Identity of purchaser
– Location of land
– Nature of the uncertain
payment
– Amount of consideration for
which deferment is sought
and SDLT that would be paid
– Details of when it will be paid
• If application accepted,
additional SDLT payable 30
days from date consideration
ascertained or ceases to be
contingent
SDLT
Lease variations – impacts
on SDLT
• Rent variations
• Deemed surrender and
re-grants
SDLT
• Rent variations
– Within first five years of term
– Review over five years –
abnormal increases before
17 July 2013
SDLT
Deemed surrenders and
re-grants
• Term of lease extended
• Additional property
added to demise
• Overlap relief
SDLT
Option and pre-emption
agreements
• Acquisition of the right
itself and exercise are
separate land
transactions
• Potentially two
notifications
• Transactions may be
seen as linked
Any Questions ??