pub purchase with vat- anyone know the answer?

[blueberrysorbet]

hi, am hoping someone can help, my cousin is struggling to get this information and has asked me to post on mn for her:) she and her dp are planning to buy a pub and some of them she is interested in are with vat added of 90% it states that this may be claimed back or maybe not. can it be claimed back? does it happen straightaway? it makes a difference on what they can afford.

if anyone can help with advice that would be great, thanks

vat is set at 20% of the asking price and is refundable in the first tax return

so if pub is 120,000 vat is added to that so total cost is 144,000 but you do not get that refunded until you file your first tax return does that make sense?

that sounds reasonable, just that on the details the one she showed me says vat at 90% of the asking price?

No, it means that VAT (at 20%) is added to 90% of the purchase price so the total sum payable (and subject to SDLT) is £120,000 plus £21,600 VAT. This is common with pubs where there is residential acccommodation which is exempt from VAT. Make sure that whatever legal entity that purchases the property (individual, partnership, limited company) is the same legal entity that will run the pub and is registered for VAT.

sorry I did not understand the 90% thing but knew that you can claim the VAT back on your first tax return thank you blueberry do not want to mislead the OP.

Good luck to your cousin :)

There is not usually any need for VAT to be charged as the transaction can be regarded as a transaction of going concern. Because you are buying a business which is up and running. This may not apply if the pub has been shut down before it is bought. If VAT is to be charged, it may only be charged on the furniture and stock and not on the property as property as standard is not subject to VAT unless the owner has "elected" to charge VAT. Tell your cousin to double check with the agents what VAT is being charged on and the correct rate. It's not unusual for agents to get VAT wrong on particulars!

Its advisable to get proper advise on this rather than off MN forum (no offence to Mnetters!) VAT can be a minefield and if its ends up wrong due to structure of deal it can be costly,

If they do have to pay VAT on the purchase then its not as simple as claiming back on first VAt return. Also need to think about funding issues as the time delay between having to pay out the cash and getting it back from hmrc can be significant