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Tax – VAT

Bad debt – VAT-only invoice

The Court of Session has held that it is not possible to get bad debt relief for the whole of the unpaid VAT on a VAT-only invoice. Relief should be limited, as normal, to the fraction of the unpaid amount equating to the VAT fraction. 

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TOGC – agreement for lease?

The First-Tier Tribunal has held that the transfer of a property that is subject to an agreement for lease can be a TOGC (as a property rental business). 

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Takeover – SPV

Special purpose vehicles (SPVs) are typically companies created for the purposes of a specific transaction (eg to hold an asset in the course of a complex sale). But, there are VAT implications to consider.

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Leases – storage space

In October, self-storage suppliers (eg Yellow Box) were brought within the standard-rate charge for VAT. But, it seems that change has had a wider impact than originally appreciated.

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Land – separate supply

If land is let with other services, then there will usually be a single supply for VAT purposes. For instance, in Purple Parking [2009] it was held that a bus service was ancillary to the predominant airport car parking service, so there was a single supply. 

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Auction – opt to charge VAT?

If commercial property is sold at auction, and there are Ts occupying the property, then the buyer will want to avoid paying VAT by structuring the transaction as a TOGC (at the very least, this will save some SDLT).

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Sublease – TOGC?

It has been held that the grant of a sublease by a property-letting L can amount to TOGC for VAT purposes. Importantly, HMRC has now confirmed that it accepts that position.

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Sub-lease – TOGC?

The Tax Tribunal has found that the grant of a sub-lease by a property letting L can amount to a TOGC for VAT purposes. This is an important decision since it goes directly against HMRC’s published guidance. 

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Service charges – VAT

The VAT treatment of service charges will usually depend upon whether L has opted to tax the property. The traditional view is that if L has not opted to tax the VAT then the rent (and service charge) will be VAT-exempt (since the rent and the service charge are treated as one bundled supply). On the other hand, if L has opted to tax then VAT will be charged on the service charge. 

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Listed buildings - alterations

The current VAT zero rating for building materials and construction services supplied for approved alterations to listed residential or charitable use buildings is to be removed from 1 October.

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