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TOGC relevant date

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Published: 01 Nov 2022

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Q: My client is buying a commercial property rental business by way of an outside-the-scope of VAT TOGC. I understand that in order to satisfy the TOGC conditions, since the seller has an Option to Tax on the property, my client must notify HMRC of its own OTT and the seller that its OTT won't be disapplied by the anti-avoidance provisions and must do these by the "relevant date". My client is due to exchange and pay a deposit of £200,000 3 months before the date of completion. Does my client need to notify their OTT by the date of exchange or by the date of completion?

A: The relevant date is the (first) tax point for the property transfer; generally this is the earlier of deposit or completion. A deposit will not create a tax point however (and therefore the relevant date) if it is paid to a third party acting as an independent stakeholder (so not acting as an agent of the seller) until the money is released to the seller. It is likely therefore that the relevant date here is the date of deposit, 3 months before completion (subject to checking who holds the deposit).

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