Advantages and disadvantages of special purpose software

To the extent that BidCo intends to sell these units on long leases (over 21 years), it will make zero-rated supplies and should be able to recover the VAT charged to it (subject to blocking rules regarding white goods etc).īut to the extent that BidCo intends to grant ASTs, it will make exempt supplies. Using a design and build contract will mean that the architectural services are also zero-rated. It will be able to recover VAT that is charged by the contractors in respect of the commercial element of the building. The starting point for that gain will be the April 2019 market value. There is a capital gain, but BidCo can elect to defer that gain until the apartments are sold.

With care, no SDLT should be charged on this transfer but the timing will have to be considered carefully so as not to prejudice the earlier TOGC analysis. Tax warranties to flesh out the tax history of the company and a tax indemnity to protect against unknown pre-completion tax liabilities will also be negotiated.ĭetailed DD in respect of the property should also be undertaken. On those facts the past growth in value (i.e pre April 2019) of the property should be outside the scope of UK tax. Due diligence (DD) will be undertaken by both the lawyers and the accountants.įrom a tax perspective it is critical to verify that TargetCo has owned the property as an investment (not as trading stock) and has been centrally managed and controlled offshore so as not to be UK tax resident.

Advantages and disadvantages of special purpose software