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Readers’ forum: Does death of joint property owner cause a VAT problem?

13 May 2024
Issue: 4936 / Categories: Forum & Feedback , VAT

One of my clients owns a commercial property which is in four names as a quasi-partnership and is rented out to tenants.

The partnership is VAT-registered and there is an option to tax election in place with HMRC. One of the owners recently died and his son now owns his share; I am comfortable that a new VAT2 and VAT68 is needed; is that correct?

In the agreement there is a clause that says that if one owner wants out he has to offer his share to the existing co-owners. I assume this clause has no VAT issues?

However if the co-owners do not want the extra share the departing owner can sell his share to a third party. How would this sale be treated for VAT purposes? Is it a sale by the partnership ie plus VAT albeit all proceeds are attributable...

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