Taxation logo taxation mission text

Since 1927 the leading authority on tax law, practice and administration

Wrong charge

15 July 2014
Issue: 4460 / Categories: Forum & Feedback , Investments , Land & property , VAT

VAT has been charged on rent in error; what, if any, liability might arise on sale?

My client has owned a commercial property for three years and has charged VAT on rental income earned during that time. However he has no record of having made an option to tax election on the property with HMRC (and neither have HMRC’s Option to Tax Unit in Glasgow).

In fact there would have been no need for him to opt. He purchased the freehold of the property without being charged VAT because the seller had not made an option. Furthermore he has not incurred any major costs on the property since where VAT might have been charged by a builder.

The property is about to be sold but can we avoid charging VAT on the property sale? Could we give the tenant a VAT credit for the past three years of output tax on the basis that this was a mistake and no option was...

If you or your firm subscribes to, please click the login box below:

If you are not a subscriber but are a registered user or have a free trial, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this item in full.

Please reach out to customer services at +44 (0) 330 161 1234 or '' for further assistance.

back to top icon