vat 4A arrangement

not sure If anyone has any experience or knowledge in dealing with the above , I know someone who is trying to buy a commercial property in the southern part of the country right now and an unusual situation has arisen

my friend is not vat registered and so does expect to have to pay 13.5% vat on the purchase of the property in question , however , the vendor has informed him that due to there being a twenty year vat 4a arrangement in place and the fact that this arrangement was put in place in 1999 , a much smaller amount of vat has to be charged on the sale price

my friend passed this info on to his accountant but they never heard of such an arrangement , they just assumed that if someone isn't registered for vat , they must pay the 13.5% on any purchase of commercial property

Ok, I think it may be time to change accountants! I'm a long time away from advising re VAT and do know there were huge changes in VAT law in relation to property - - but would still know that property in some instances can be passed without charging VAT and which have nothing to do with status of purchaser!

Any issue re VAT and property is best answered by someone with an AITI/CTA qualification, and is best paid-for. Any mistake when it comes to VAT can be costly, and VAT on property was/is always a minefield. Ie I'm advising whatever advice you get here on this website, also seek in the real-world !

Setanta12 said:

Ok, I think it may be time to change accountants! I'm a long time away from advising re VAT and do know there were huge changes in VAT law in relation to property - - but would still know that property in some instances can be passed without charging VAT and which have nothing to do with status of purchaser!

Any issue re VAT and property is best answered by someone with an AITI/CTA qualification, and is best paid-for. Any mistake when it comes to VAT can be costly, and VAT on property was/is always a minefield. Ie I'm advising whatever advice you get here on this website, also seek in the real-world !

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Could purchaser unwittingly aid a seller who had unfinished business with revenue ? , I.e , implicate themselves in a vat scam

VAT on property and VAT 4a is hardly a scam. The OP's friend clearly needs technical professional advice here. I'd echo the above recommendation of going to a specialist tax consultant. Anything else is just speculation.

T McGibney said:

VAT on property and VAT 4a is hardly a scam. The OP's friend clearly needs technical professional advice here. I'd echo the above recommendation of going to a specialist tax consultant. Anything else is just speculation.

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allow me to rephrase my post

ive looked up some info related to vat 4A arrangements , apparently it was often the case that some commercial properties were only vatable for a specific period of time , in this case its twenty years and the owner is selling on the property sixteen years into the twenty years which is listed under the vat 4a form , as such the seller wants my mate to pay him four twentieth of the original vat amount and once this is paid , the seller will not charge my mate vat on the sales price

what im unsure of however is the following , according to my friend , the sitting tenant in the property is also named on the vat 4a form , this tenant is in a twenty five year lease which does not expire for nine more years , might my friend be obliged to sign up to certain conditions which stem from the vat 4a scheme when he is added to the lease as the new lessor - landlord

of course my friend is happy to not have to pay 13.5% on top of the purchase price but he is wondering if the conditions of a vat 4a transfer from one owner to the other in the same way a lease does

Your friend needs a new accountant. Under the old VAT rules where a long lease was granted the landlord and tenant could apply for a VAT 4a authorisation, whereby instead of the tenant paying VAT over to the landlord and then trying to recover it, the tenant self accounted for the VAT and the landlord was deemed to have disposed of his interest in the property.

Your friend needs to get proper advice.

Joe_90 said:

Your friend needs a new accountant. Under the old VAT rules where a long lease was granted the landlord and tenant could apply for a VAT 4a authorisation, whereby instead of the tenant paying VAT over to the landlord and then trying to recover it, the tenant self accounted for the VAT and the landlord was deemed to have disposed of his interest in the property.

Your friend needs to get proper advice.

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the main problem my friend has right now is that this solicitor hasn't a rashers when it comes to commercial property or vat for that matter