Readers’ forum: Post-deregistration VAT claim

I act for a sole trader client that ceased to trade on 30 November 2021. He sold his trading property on that date for £150 000 which was exempt from VAT because there was no option to tax election in place.

My client’s business as a printer was fully taxable. We deregistered the business for VAT on 30 November 2021 to coincide with the final day of trading.

The conveyancing bill for the property sale was issued by the solicitor on 7 December 2021 for £2 000 plus VAT. We submitted form VAT427 to HMRC to reclaim this VAT but the officer has rejected it because the expense relates to an exempt supply.

Our view is that the VAT should be claimable because of the partial exemption de minimis rules on the basis that this VAT of £400 is less than both 50% of input tax claimed...