Q&As

When transferring properties which have waived the exemption to tax which make up a property investment business of a deceased to beneficiaries for no consideration, is VAT chargeable?

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Published on LexisPSL on 07/03/2016

The following Tax Q&A provides comprehensive and up to date legal information covering:

  • When transferring properties which have waived the exemption to tax which make up a property investment business of a deceased to beneficiaries for no consideration, is VAT chargeable?
  • Is there a supply of goods? Is there consideration?
  • Is there a deemed supply?
  • Is there a TOGC?

When transferring properties which have waived the exemption to tax which make up a property investment business of a deceased to beneficiaries for no consideration, is VAT chargeable?

This Q&A will be relevant where properties are held personally, in the course of his trade, by the deceased rather than through a corporate structure and where the properties are in the UK.

Under s 4(1) of the Value Added Tax Act 1994 (VATA 1994), in order for a transaction to be within the scope of UK VAT, it must:

  1. be a supply of goods or a supply of services

  2. be a taxable supply

  3. take place in the UK

  4. be made by a taxable person, and

  5. be made in the course or furtherance of any business carried on by that person

If one of these is not met, it will be outside the scope of UK VAT. For further information on these basic requirements, see Practice Note: When does VAT apply? and related notes in the ‘VAT basic principles’ sub-topic.

Is there a supply of goods? Is there consideration?

There will only be a supply where someone does something or agrees to do something in return for consideration—ie there needs to be consideration for there to be a supply for VAT purposes.

Consideration for these purposes is a very wide term and can apply for example to where a simple condition is

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