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Post by overthehill on Nov 17, 2021 13:28:54 GMT
This was by far the clearest documentation I could find on property VAT. The missing link for me is the Capital Goods Scheme which basically allows all the VAT to be reclaimed and refunded at the end of the next VAT quarter in exchange for a 10 year agreement to provide services + VAT, otherwise some of the refunded amount could become payable again at a later date.
No comment at this stage on how SPVs manage to avoid SDLT. I need to research that as I thought the SPVs in Property Partner did pay this !
It's easy to do by mistake but could you move that last comment so it doesn't look like it was from me, thanks. The forum owners obviously have no intention of fixing this bug.
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Post by overthehill on Nov 18, 2021 10:33:51 GMT
So is this financing a tax avoidance scheme ?
Tax avoidance with HMRC's blessing is the UK tax system. HMRC counter that by quite happily taxing a transaction on the same residential or commercial property multiple times if they can get away with it.
I couldn't find anything to suggest SPVs can avoid paying SDLT when adding a new property. SDLT wouldn't apply if the SPV was subsequently sold as it would be a share transaction not land/property.
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Post by overthehill on Nov 18, 2021 10:52:39 GMT
I'm not sure how to assess the risk of these loans, all loans must have some risk. As long as all the prerequisites are completed, the VAT refund seems assured and known from the beginning. I'm wondering what can change during the refund period to change that status? One risk at the outset is the VAT agent !
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Post by uksoul on Dec 1, 2021 15:32:50 GMT
1st VAT loan onboard..3mths@10%
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Post by overthehill on Dec 1, 2021 15:41:16 GMT
1st VAT loan onboard..3mths@10%
If a borrowing company goes into administration before the end of the loan is the VAT still repaid by HMRC ? About the only thing that jumped out at me after reading the document.
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Post by uksoul on Dec 1, 2021 16:10:13 GMT
1st VAT loan onboard..3mths@10%
If a borrowing company goes into administration before the end of the loan is the VAT still repaid by HMRC ? About the only thing that jumped out at me after reading the document.
The VAT is payable upon purchase so in the unlikely case of administrators getting involved then that would just delay the repayment until purchase is settled. VAT must be paid upon purchase. This new one extremely unlikely to face that issue.
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Post by overthehill on Dec 1, 2021 16:26:20 GMT
If a borrowing company goes into administration before the end of the loan is the VAT still repaid by HMRC ? About the only thing that jumped out at me after reading the document.
The VAT is payable upon purchase so in the unlikely case of administrators getting involved then that would just delay the repayment until purchase is settled. VAT must be paid upon purchase. This new one extremely unlikely to face that issue.
I'm referring to a situation where the borrowing company goes into admin after the purchase is completed and before the refund is repaid by the HMRC. It seems like a big assumption to me with little knowledge of VAT agreements that the HMRC is just going to pay that back as there is no longer a company to setup a legal contract with.
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Post by Ace on Dec 1, 2021 16:33:17 GMT
The VAT is payable upon purchase so in the unlikely case of administrators getting involved then that would just delay the repayment until purchase is settled. VAT must be paid upon purchase. This new one extremely unlikely to face that issue.
I'm referring to a situation where the borrowing company goes into admin after the purchase is completed and before the refund is repaid by the HMRC. It seems like a big assumption to me with little knowledge of VAT agreements that the HMRC is just going to pay that back as there is no longer a company to setup a legal contract with.
This question is addressed in the Lender Risks table in the LRS. (Don't want to post it here as PL are a bit sensitive about these things).
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Post by uksoul on Dec 1, 2021 16:54:57 GMT
The VAT is payable upon purchase so in the unlikely case of administrators getting involved then that would just delay the repayment until purchase is settled. VAT must be paid upon purchase. This new one extremely unlikely to face that issue.
I'm referring to a situation where the borrowing company goes into admin after the purchase is completed and before the refund is repaid by the HMRC. It seems like a big assumption to me with little knowledge of VAT agreements that the HMRC is just going to pay that back as there is no longer a company to setup a legal contract with.
Oh i see, there are guarantees in place in that case to ensure repayment.
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Post by overthehill on Dec 1, 2021 17:07:25 GMT
I'm referring to a situation where the borrowing company goes into admin after the purchase is completed and before the refund is repaid by the HMRC. It seems like a big assumption to me with little knowledge of VAT agreements that the HMRC is just going to pay that back as there is no longer a company to setup a legal contract with.
This question is addressed in the Lender Risks table in the LRS. (Don't want to post it here as PL are a bit sensitive about these things).
Yes. That only says the senior lender will waive any interest in the VAT refund. That is only relevant if HMRC hand over monies to a company in administration that doesn't have any sales/services to produce VAT invoices. The loan has a PG, something I've personally yet to see any positive action emanating from since investing in P2P.
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upland
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Post by upland on Dec 1, 2021 18:01:30 GMT
I wondered what would happen if the registration that allows the VAT to be returned was rejected after it had been approved due to some new undisclosed factor turning up. I am not experienced enough to suggest what but if some sort of technicality were to arise a few weeks after kick off and the VAT couldnt be reclaimed. I suppose one would have to rely on the PG
I had a lot of PGs with my FC loans and I dont have a lot of FC loans any more.
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dave4
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Cynical is a hobby not a lifestyle
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Post by dave4 on Dec 1, 2021 22:02:01 GMT
A Q na A e mail on the Vat loans a few weeks ago.
Ok so just a thought.
IF the loan is not repaid, what happens then??
What would happen say the scenario of (speaking generally)
No refund of vat lenders at fault
No refund of vat prop lends at fault.
Yes i understand there is no security secured, but... humor me please
The loan would not proceed if borrowing entity was not correctly registered for VAT or the properly not correctly elected for VAT.
Hope that clarifies,
All the best,
Andrew
I would hope / expect that everything was in order with the loan. that beside my questions stand without a answer. Your answer implies that capital and interest is a guaranteed certainty. I think this lending on vat is a excellent venture alongside and complementing prop lends current operations. but we live in a uncertain / imperfect world. So....?
Thankyou
Many thanks for the email.
There is an appointed VAT agent, the VAT agent is a firm of accountants, they have PI cover that we can call upon in the event of something having been done incorrectly. The VAT agent will manage the process of submitting a VAT return and receiving the VAT rebate and then paying it to Proplend.
This is quasi government (HMRC) debt and this is lending on the VAT paying and reclaiming process which can take up to 120 days.
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Post by Ace on Dec 3, 2021 9:57:23 GMT
I just got the email to say I'm in.
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Post by uksoul on Dec 3, 2021 10:12:14 GMT
I just got the email to say I'm in. Me too!.
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dave4
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Cynical is a hobby not a lifestyle
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Post by dave4 on Dec 3, 2021 10:19:22 GMT
I just got the email to say I'm in. Me too!. Ditto A Pleasant surprise on a friday.
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