Readers' forum : Sale commission

An estate agent has just earned a commission of £55 000 plus VAT for arranging the sale of a property valued at £2.5m. He charged VAT on his commission but the seller has said that this should be exempt from VAT because the deal was carried out by a transfer of shares in a limited company that owns the property rather than an actual transfer of the property between seller and buyer. Is this correct? If so should my client issue a VAT credit to the seller? And should he correct the overcharge by submitting a VAT652 error correction form to HMRC because the output tax of £11 000 was included on his last VAT return and the error exceeds £10 000?

Finally how will it affect my client’s input tax position if he now has a source of exempt income for the first time?

Query 19...