My client, a limited company owns and formerly traded (retailer) in a premises it owns. It was VAT registered as a trader. The property had been acquired in 1995 and was never developed or refurbished by my client. The recession impacted the trade and my client ceased trading. It let the property and the letting is long term and was/is exempt from VAT. so there is no VAT on the rent. The tenant, who is a vat registered trader, spent money refurbishing the premises but the amount the tenant applied on the premises is unknown. Most likely well below the amount necessary to have developed the property (as the property has a value of €2.3m) but sufficient to have a Capital Good Scheme issue. My client Remarked that the tenant informed him of capital spending of the order of €180k.
My client is now selling the property with the tenant in situ.
The sale will fall under the TOB relief and be exempt. What information will be required however under the CGS for the expenditure by the tenant. Is my client obligated to get the information of the extent of any CGS expenditures by the tenant and pass this information on to the purchaser?
Also does the purchaser have a contingent liability for VAT repayment in the event the tenant ceases ( which is possible) or transfers to an exempt activity or does the CGS commitment only relate to the tenant?
By way of observation the LSI – PCVE does ask this question in section 4.4.7 and also in Section 7 where each tenant refurbishment is to be described and the Capital Goods Record to be provided.