When does the purchaser have to pay VAT to the seller on the sale of property?
If the seller is registered for VAT the transaction will be a VAT transaction. If it is not zero rated the seller will have to pay 14% VAT on the purchase price to the Receiver. If the contract does not specifically stipulate that the purchaser has to pay VAT over and above the purchase price then the seller will not be able to claim it from him or her. It is therefore important to ensure that this aspect is properly negotiated between the parties and stipulated in the agreement. If this is not done it might mean that the seller gets 14% less as his duty to pay the VAT to the Receiver is independent from any obligation the contract places on the purchaser to pay the VAT to the seller.