Good news for commercial property buyers

And the bad news? At completion, you will have to fund that VAT (20% of the purchase price) for anywhere between 28 and 150 days.

As a general rule, most commercial property in the UK is continuously ‘opted in’ to the VAT system. Buyers normally chose the ‘opt in’ route to allow the recovery of any VAT associated with maintaining and developing the property during their period of ownership.

When an ‘opted in’ property is sold, VAT is charged on the sale of the property and at completion the buyer is liable to pay VAT on the purchase price. After completion, the buyer includes the input tax on the purchase in their next VAT return, giving rise to a VAT recovery. This cycle continues until a buyer does not ‘opt in’ and forgoes the ability to reclaim future VAT.

Every buyer of commercial property must plan for the cash flow shortfall that paying the VAT will cause. If you are financing your purchase with debt funding, it is worth bearing in mind that most commercial mortgage lenders adopt a maximum ‘loan to value’ criteria of 70-80%. This leaves many borrowers experiencing difficulty in securing the short-term funding required to settle the VAT.

VATBRIDGE was designed to provide a solution. Short-term secured loans that recognise the inherent security of the VAT recovery from HMRC, rather than being restricted by a loan to valuation calculation. For the period of the loan, VATBRIDGE becomes the borrower’s authorised VAT agent, managing the VAT reporting process ensuring the loan is outstanding for the shortest possible time and receiving the rebate directly into our nominated bank account and repaying the loan.

Offering loan advances up to 100% of the VAT due for sums from £50,000-5m+ and with seven-day completions, VATBRIDGE can make securing your biggest VAT rebate that little bit easier.

If you have any questions about a VATBRIDGE loan, please get in touch. 

We can be contacted at www.vatbridge.com, by email at [email protected] or on the telephone on 0845 468 6423.