Auction purchases

Finding the VAT Position in an Auction Legal Pack

PropertyVAT Team · Updated 21 October 2026 · 3 min read

At auction, the legal pack is the entire due diligence window. Once the hammer falls you are contractually committed, and a VAT surprise is your problem, not the seller's.

Thirty minutes with the pack, or a modest fee for your solicitor to read it, is the cheapest insurance in commercial property.

Where VAT appears

The special conditions are where to start. They override the general conditions and are where VAT is normally dealt with.

The wording to watch for

"The price is exclusive of VAT" — expect to pay 20% on top. Budget accordingly, and remember stamp duty is calculated on the VAT-inclusive figure.

"The seller has elected to waive exemption" or "has opted to tax" — VAT applies. Ask for the notification and HMRC's acknowledgement.

"The sale is treated as a transfer of a going concern" — no VAT is intended, but conditions must be met. Find out what happens if the treatment fails, and whether you need to opt to tax and notify before a specified date.

"VAT will be charged if applicable" — this is not an answer. Push for a definite position before bidding.

Silence — not reassurance. An unopted property genuinely carries no VAT, but silence can equally mean nobody addressed it.

The checks to run

1. Confirm whether VAT applies, in writing, from the special conditions.
2. Ask for evidence of any option to tax — the notification and acknowledgement, not an assertion.
3. Check whether the guide price is VAT-exclusive. Most are.
4. Check the completion window. Often around 28 days, but it is set by the conditions.
5. Look for mixed-use allocation. Where part is residential and part commercial, treatment may differ across the parts.
6. If a TOGC is proposed, identify exactly what you must do, and by when.
7. Re-check for addenda on the morning of the sale.

Building your real maximum bid

Work the whole number before you go in:

• Hammer price
• Plus VAT at 20%, where it applies
• Plus SDLT calculated on the VAT-inclusive consideration
• Plus buyer's premium, legal fees, searches

The stamp duty line is the one that quietly moves. Because SDLT is charged on the VAT-inclusive price, VAT does not only create a temporary funding need — it permanently raises the tax on the purchase, and that part is never recoverable.

Preparing before the room

If the pack shows VAT is payable, three things should be under way before you bid:

• VAT registration for the buying entity. You cannot reclaim VAT you were not registered for, and registration takes weeks.
• An option to tax, if a TOGC depends on it. HMRC acknowledgement is not instant.
• Funding agreed in principle for the VAT element.

Buyers who win first and arrange these afterwards are the ones who struggle to complete inside the window — and the deposit is what is at risk.

If you spot a problem in the pack

You have options before the auction and almost none after it. Speak to the auctioneer, ask the seller's solicitor to clarify, and if the position cannot be resolved, be willing not to bid.

A lot you did not buy costs nothing. A lot you cannot complete on costs the deposit.

This guide is general information, not legal or tax advice. Always have a solicitor review the legal pack for the specific lot before bidding.