By Owen Ormond
Fixed-charge receivers will be all too familiar with that uncomfortable feeling of needing to complete on a sale, but having no clarity on the VAT position of the property. Many will have experienced the frustration of trying to extract information from HM Revenue & Customs (HMRC) as to whether or not a commercial property has been opted to tax. Regardless of whatever contractual protection is in place, a receiver cannot help but feel nervous that they should be collecting VAT and, if they don’t, that they may get HMRC knocking on their door if it is not collected.
But are these concerns valid? The truth is that a fixed-charge receiver is unlikely to be liable for VAT even if VAT was chargeable on a property provided that the receiver did adequate due diligence.