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Tax charge on non-consumption?
On a freehold sale it is traditional to take a 10% deposit. Commercial real estate lawyers know that for VAT purposes the time of supply depends on the nature of the deposit as follows:
- if the deposit is held as stakeholder the time of supply is when the deposit is released on completion of the transaction;
- if the deposit is held as agent for the seller the time of supply is when the deposit is paid or released to the seller.
There is a logic to this because when a payment is held as a stakeholder the monies are not released to the seller – they cannot use that money – so it would be wrong conceptually to treat that as a time of supply for VAT purposes. Conversely when a deposit is held as agent for the seller and they may do what they want with...
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