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12 February 2008
Brian Slater, Head of Commercial Tax, Finers Stephens Innocent LLP, Solicitors
I refer to the article 'What's my option' by Neil Warren (Taxation, 1 November 2007, page 476).
Neil states in his excellent article that ABC Ltd charging VAT on the property in Example 3 (on page 477) is not a problem for the clothes retailer, apart from the cash flow implications. With respect to Neil, the charging of VAT causes a very real liability to the clothes retailer; that of increased stamp duty land tax. SDLT at 4% would be payable on the VAT, in Neil's example of sale proceeds of £1 million, this would mean an increased liability of £7,000. Perhaps this is tolerable to the clothes retailer, but imagine a much larger concern buying a substantial commercial property for £20 million plus.
