Readers’ forum: Will TOGC property opportunity save VAT?

I act for a client who trades as a partly exempt business in the education sector. In other words her business cannot claim all of the input tax incurred on its expenses.

My client is looking to buy the freehold of new premises from which to trade and there are two properties available in the same block – both consist of three floors of office space and both have an option to tax election in place for the seller.

The first building is for sale at £800 000 plus VAT and will be a vacant building if my client buys it. The other building is for sale at £825 000 but has a long-term tenant occupying the ground floor paying rent of £25 000 plus VAT each year. For this property the estate agent is saying that no VAT will be charged because the sale should qualify...