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When you are buying a commercial property, the selling agent’s details will clearly say VAT will not be applicable or the asking price +VAT.
If you have found a commercial property for sale and VAT is payable, then one of the first things to think about is how to fund the VAT?
VAT on the purchase and sale of a property is payable upon completion. Even if you set up an SPV, once you have completed the documentation, and HMRC have done their checks, HMRC will send the VAT money back to you. Therefore this process can take from a few weeks to six months.
With most commercial properties being acquired via a mortgage, the first thing to realise is that the mortgage company will not fund the VAT. However what other options are there available to you?
The process of applying and obtaining a commercial property VAT loan is very simple.
Initially we will have a quick conversation with you to obtain some more information. For example the VAT Loan amount, completion timescales, type of commercial property (offices, warehouse etc) and details of your plans for this property.
Once we have this information you will then receive indicative terms. If you wish to go ahead, you will be asked for the following info:
Allowing access to your Government gateway allows the VAT refund to be reallocated. This means you do not have anything to do once the funds have been released to your solicitors.
Usually from start to finish the process will take 2-3 working days.
The funder then sends the VAT loan monies directly to your solicitors. They then in turn transfer this money to the buyers’ solicitors.
After HMRC have received the VAT payment, they will complete some checks and refund these monies directly to our funder acting as an agent.
On average an 8% facility fee is charged. However, this is on a case by case basis and is subject to the indicative terms. This will be deducted from the borrowing amount and you will need to cover this upfront.
our fees are fixed regardless of how long HMRC takes to repay the refund. This is so you know exactly how much our service will cost.
As the market leader in VAT financing, if you receive a better offer for this facility please send it over and we will beat it as part of our price guarantee.
We are a third-party funder, this has no impact on your mortgage.
We’re often asked if the property can be purchased in the name of a trading company, and the answer is yes! The process is the same as above, however we’ll also look at PAYE liabilities through the government gateway connection to make sure this is up to date.
In the UK, there are a small number of funders and finance companies that will fund VAT on the purchase of a business building such as an office, shop, or warehouse. At VAT Loans, we work with a small panel of funders to get the best possible rates for you.
However, it may be that one funder has turned you down for credit. We have seen this many times, often not for reasons associated with a customer’s credit profile. However, it may be they do not like the building or purpose the building will be used for.
