1. Is there a general exception with VAT on Commercial Property.

Commercial Property is a special case when it comes to VAT. The default position on the sale or lease of commercial property is that it will be exempt from VAT, but there are exceptions – for example where property owners have elected to pay VAT.

2. How do you notify HMRC of the requirement to charge VAT?

You must notify HMRC if you’re registered for VAT and intend to start charging.

3. Assuming a property owner has notified HMRC of the requirement to charge VAT on the property if a purchase is made for the property, how much will the tax be?

If you make a commercial property purchase, the tax will be 20% of the total purchase price.

4. Do you know of any commercial rents that are exempt from VAT?

There are 2 types of commercial rents that are exempt from VAT. First, rents for property used for car parking (parking lots). Second, rents for a property that are below 300 square meters and are not used for business.

5. Does the Commercial Estate Agent have any responsibility to ensure VAT is paid on commercial property?

An estate agent, as a general rule, would only be aware of the date the property was purchased and the name of the vendors. It would not be the agent’s responsibility to ensure the buyers paid for any VAT before completion of the sale.

6. Does the amount of VAT payable increase if a property is a sublet?

No, the VAT payable does not increase if a property is sublet. The VAT is added to the final price of the property.

7. What documentation is sent to HMRC when a decision is made to charge VAT on a property?

If you’re a property developer, you’ll need to provide a VAT return for the sales of your properties and you’ll need to pay the VAT due. At every point in the sales cycle, there will be documentation to send to the HMRC.