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I have a client who bought a commercial property in 2006 for £200 000 plus VAT that has been rented out since that date. The client has been charging VAT on the rent but has never made an option to tax election with HMRC.
The tenants have now vacated the building and he is selling the property for £240 000 plus VAT to a business that cannot recover input tax (it carries on an exempt activity).
It has been suggested by the buyer (who trades in the financial services sector so is well informed on tax issues) that the vacating tenant should be given a VAT credit note for the VAT charged on the rent for the past four years (the error adjustment period for VAT purposes).
Input tax claimed on the property costs in that four-year period (small amounts) will then be treated as an error and disclosed on...
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
