A VAT registered trust owns a commercial property. We want to use s42 to slot a VAT registered company between the trust and the property, so that the trust owns the company and the company owns the property.

How is this treated from a VAT perpective? I copied the entire VAT Act and pasted it into Word, then searched for section 42.

I found s8(25) had the answer and it contains some surprises.

s8(25)(i) If it were the business that was being disposed of as a going concern, there is no VAT. 1st surprise – it is not a zero rated VAT transaction.

s8(25)(iii) As it is the property that is being disposed of, if the trust is going to be the only tenant, there is no VAT. 2nd surprise – I don’t think this condition applies to any other transaction in the VAT Act.

Now to answer the orginal question. VAT must be charged by the trust and claimed by the company, because neither of the above conditions apply.