VAT and commercial real estate deposits: Elizabeth Small writes for Taxation

Tax Partner, Elizabeth Small’s article entitled ‘Tax charge on non-consumption?’ was published in Taxation. In her article, she discusses the VAT complications that can arise with deposits on commercial real estate transactions.

Elizabeth explains that ‘VAT is an ever-changing area of tax law but some inalienable foundations seem to be shifting. It started as a tax on consumption, so it is interesting to note that VAT in this context has become a tax on non-consumption’.

To further understand the tax charge on non-consumption, she highlights the following five key points:

• Time of supply on a freehold sale of commercial property.
• HMRC statements on forfeited payments.
• Increased risk of forfeiture on purchase contracts.
• VAT on a deposit forfeited on an opted freehold.
• Buyers may be asked to pay VAT on deposits.

Read the full article here.