Is VAT charged?
VAT can apply where the seller has opted to tax or the building is new; a transfer of a going concern may mean no VAT at all.
Fund the VAT
VAT bridging loans for commercial property.
When a commercial property is sold with VAT charged (for example, where the seller has opted to tax), the buyer must pay VAT on top of the price at completion, even if they can reclaim it later. A VAT bridging loan is a short-term loan that funds that VAT until HMRC repays it, typically a few months later.
Operator notes
Three things to confirm before completion.
The VAT element only works as a bridge if it will genuinely be recovered.
Can you reclaim it?
The buyer needs to be VAT-registered and, where needed, to have opted to tax so the VAT can be reclaimed.
When will HMRC repay?
Delays in registration or HMRC checks extend the loan and its cost.
Next step
Raise the VAT position at the start.
Share the purchase, the VAT treatment and your registration status, and we will give you a straight view on how the funding could be structured.
Practical context
The VAT is due at completion even if it is reclaimed later.
When VAT is charged on a commercial property, the buyer pays it on top of the price at completion. A VAT bridge funds that amount until the reclaim is repaid, typically a few months later.
If the VAT cannot be recovered, or recovery is delayed, the bridge has no natural exit. That is why the VAT position needs confirming by your solicitor and tax adviser before terms are agreed.
- Confirm whether VAT is charged or a transfer of a going concern applies
- Check VAT registration and the option to tax
- Allow a realistic time for HMRC to repay
Decision framework
Check the VAT bridge has a clear exit.
The reclaim is the repayment route, so it has to be reliable.
Charge
VAT confirmed as payable on the purchase.
Recovery
Registration and option to tax in place.
Timing
A realistic repayment date, with headroom.
Illustrative guidance only; eligibility, pricing and terms are confirmed after review. Bridging finance is secured against property. Your property may be repossessed if you do not maintain repayments on a loan secured against it. Take independent tax advice on VAT.