# VAT on Commercial Lease



## sheero (25 Aug 2008)

my brother took on a lease 9 years ago in a shopping centre, the landlord never sent a vat invoice for the vat portion, hence it was never paid. he left the shopping centre 2 years ago and the lease was to be assigned to the new tenant, but the landlord says it cant be assigned as the vat was never paid, so my brother will get no money from the new tenant as the landlord is just giving the tenant a new lease....it sounds totally illegal to me, but his solicitor is not well versed in the area, any idea who is at fault for the vat here, my brother or the landlord ?

and can a landlord just cast away a lease and create a new one ?


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## DB74 (25 Aug 2008)

VAT on Leases is a very complicated area and can be very expensive if you get it wrong. Your brother needs to go to an accountant or specialist tax expert.

There are a number of important issues here, such as who is actually assigning the lease to the new tenant, was VAT accounted for on the surrender of the lease by your brother, how long was the original lease for, was your brother a VATable business.

In general and with the majority of commercial leases I have come across, a Form VAT4A is completed which means the same person is responsible for both paying the VAT on the Lease to the Revenue and also for reclaiming the VAT on the same lease. This has the net effect of no VAT actually changing hands but DOES NOT MEAN that the transaction didn't include VAT.

What does it say in your brothers contract - did the lease revert back to the landlord when he vacated or does your brother still retain possession over the leasehold.


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## Crugers (25 Aug 2008)

> my brother took on a lease 9 years ago in a shopping centre, the landlord never sent a vat invoice for the vat portion, hence it was never paid.


A lease of less than ten years can be issued without VAT...

But as DB74 says 





> VAT on Leases is a very complicated area


Methinks your brother needs reliable professional advice...


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