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For more than 30 years, a trader let the office above his shop to a firm of solicitors and charged VAT on the rent. However, HMRC have not been notified of an option to tax the property
My client has traded as a grocer (sole trader) for more than 30 years and owns the freehold of the building from which he trades. This comprises the ground-floor grocery shop and a first-floor office which for the past 21 years he has rented out to a third-party solicitor.
He has always charged VAT on the rent from the first-floor letting but says he has never opted to tax the property with HMRC.
The client is now retiring and is granting a 21-year lease on the ground-floor shop premises with an advance lease premium charged of £50 000.
The leaseholder will trade as a takeaway kebab business. I advised the client to charge VAT on the £50 000 premium because he has been charging VAT on rent since 1992 but the buyer has asked for proof of the option to tax election with HMRC before...
Please reach out to customer services at +44 (0) 330 161 1234 or 'customer.services@lexisnexis.co.uk' for further assistance.
