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When purchasing a commercial property with an occupying tenant, buyers often assume that VAT will be payable in addition to the purchase price - potentially a significant additional cost to budget for.
However, this is not always the case.
In a recent transaction, our client was concerned about the VAT liability after learning part-way through the due diligence exercise that the property was VAT-elected. However, after reviewing the details, we were able to confirm that the purchase would be treated as a Transfer of a Going Concern (TOGC).
What does this mean? Because the property was being acquired with the benefit of an existing tenant - and our client was buying it as an investment - the transaction met the criteria for a TOGC. As a result, VAT was not chargeable, reducing the upfront financial burden.
This highlights why careful legal and tax consideration is essential when acquiring commercial property – helping you to navigate VAT complexities and avoid unnecessary costs. If structured correctly, significant savings can be made.
Contact us today to discuss which strategies would be most suited to your business operations on 0808 172 93 22 or complete our quick contact form for a no obligation discussion!
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This update is for general guidance only and advice should be taken in relation to a particular set of circumstances.
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