Adsum provides commercial property tax funding to those who need to pay VAT as part of a commercial property purchase.

This is provided on practical completion and meets time-critical deadlines, ensuring that businesses can complete commercial property purchases even if their cash flow is tight.

Unlike taking out a long-term loan that has to be serviced monthly from revenues, our commercial property tax funding solution offers an advance on the sum that will later be repaid to the business by HMRC. Adsum offers a superior and specialised way for you to obtain crucial finance quickly and cost-effectively.

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“I managed to agree a deal in principle to purchase a very sought after property in London. At the time of the agreement I hadn’t realised the property was opted to tax meaning I had to pay an additional 20% VAT. Through Adsum I was able to cover the extra cost quickly and affordably. They took care of everything so I could go ahead with the deal, without delay.”
How we helped fund VAT on a commercial property purchase

Funding VAT on a commercial property purchase

Commercial property tax credits are available to claim back from HMRC after paying VAT on a commercial property purchase.

When a commercial property has been opted to tax with HMRC, usually an additional 20% must be paid as VAT upon completion. Then the VAT can be claimed back as a VAT refund. Getting a tax credit advance ensures a business’s cash flow will not be impacted as the advance means there’s no need to front up the funds to cover the VAT or wait for reimbursement from HMRC.

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Who can access commercial property tax credits?

Your business can access commercial property tax credits regardless of whether it is pre-revenue, loss-making or in-profit. However, these four requirements must be met:
Who can access commercial property tax credits?

1. You have VAT to pay on a commercial property purchase

Who can access commercial property tax credits?

2. Your business is VAT registered (or in the process of VAT registering)

Who can access commercial property tax credits?

3. You are eligible to recover the VAT

Who can access commercial property tax credits?

4. The commercial property you’re buying must have VAT included in the purchase price

Check the invoice to be certain.

How much are they worth?

Commercial property that has been opted to tax with HMRC usually includes a 20% VAT charge upon completion. This is the amount we can provide to you in the form of a commercial property tax credit advance, as this is the amount you will later receive from HMRC to cover the cost.

VAT on commercial property can also be reclaimed on associated costs and refurbishment costs in line with the appropriate VAT invoices.

If you have additional costs, for example, to refurbish the commercial property, we can also offer ongoing Instant VAT Refunds on a rolling monthly basis so you don’t have to wait for HMRC’s VAT refunds on those costs.

What people ask us about commercial property VAT

Do you pay VAT on commercial property?

All commercial properties are VAT exempt at the point of sale. However, commercial property owners do have the option to tax, which means charging VAT at 20%. New commercial property (defined as property that is less than three years old) is also liable to VAT at the 20% rate. If you do have to pay VAT on the commercial property you’re purchasing, and you’re eligible for a VAT refund, a VAT advance courtesy of Adsum means you’ll receive the money in advance of HMRC’s reimbursement and can use it to cover the cost of the VAT you have to pay on completion of the property purchase.

How do I avoid paying VAT on commercial property?

You cannot avoid paying VAT if it is due. However, if the property you want is opted to tax or a new build, you can use intelligent funding solutions to make the VAT payment, such as Adsum’s commercial property tax funding. As we provide you with an advance on your VAT refund from HMRC, your cash flow will not be affected despite the VAT charge.

Is there VAT on the sale of a commercial property?

VAT has to be charged on the sale of a commercial property if the option to tax has been made on it. If so, the option to tax is largely irreversible and this is not at the discretion of the seller.