In Balhousie, the Supreme Court has held that a sale and leaseback which was used to finance the zero-rated acquisition of land did not have the result that the person entering into that sale and leaseback as vendor/lessee had disposed of its entire interest in the land for VAT purposes. The anti-avoidance legislation at VATA 1994 Sch 10 Part 2, which would otherwise trigger a self-supply charge, was therefore not engaged. Where taxpayers intend to hold property for a relevant charitable or residential purpose, it is essential that the structuring of the financing and acquisition of the property do not trigger an unexpected VAT charge. Confirmation that it should not be prejudicial from a VAT perspective to use a sale and leaseback arrangement over other forms of financing is therefore welcome news to taxpayers.
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In Balhousie, the Supreme Court has held that a sale and leaseback which was used to finance the zero-rated acquisition of land did not have the result that the person entering into that sale and leaseback as vendor/lessee had disposed of its entire interest in the land for VAT purposes. The anti-avoidance legislation at VATA 1994 Sch 10 Part 2, which would otherwise trigger a self-supply charge, was therefore not engaged. Where taxpayers intend to hold property for a relevant charitable or residential purpose, it is essential that the structuring of the financing and acquisition of the property do not trigger an unexpected VAT charge. Confirmation that it should not be prejudicial from a VAT perspective to use a sale and leaseback arrangement over other forms of financing is therefore welcome news to taxpayers.
If you are not a subscriber, subscribe now to read this content.
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