For brokers

When to Refer a VAT Case

PropertyVAT Team · Updated 21 October 2026 · 3 min read

The economics of a VAT referral are simple: referring early costs nothing and protects the completion. Referring late often means there is nothing left to protect.

The trigger points

Refer when any of these is true:

VAT is confirmed payable and the client's capital is committed. The clearest case. The money exists but is doing something else.

The purchase is at auction and VAT applies. Fixed completion window, deposit at risk, no renegotiation. Refer before the client bids.

A TOGC is intended but not certain. Set up a standby. The failure mode is 20% appearing with days to go.

The client is not yet VAT registered. This is the earliest and most valuable trigger, because registration takes weeks and a lender will tell them to start now.

Completion falls just after the client's VAT quarter end. The reclaim could be three months out rather than six weeks. The client may not have modelled that.

The senior lender will not lend against VAT. Common, and often discovered late.

When not to refer

Being straight about this protects the relationship:

• The client has idle cash with no competing use and a short reclaim ahead
• The entity is established with a clean filing history, completing just before quarter end
• A TOGC is genuinely solid and the client has the funds anyway

Mention that the option exists, note it costs nothing to have in reserve, and leave it. A broker who pushes a facility the client did not need is remembered for that, not for the completion.

Refer before you are certain

The instinct is to wait until the VAT position is confirmed. That is backwards.

The constraint on a VAT case is almost never the lending — it is the client's HMRC paperwork. A lender contacted at enquiry stage will tell you, in one call, what the client needs to start. Usually:

• Get the buying entity VAT registered now
• Notify an option to tax if a TOGC is intended
• Get the VAT position confirmed in writing from the contract

None of that requires the deal to be certain. All of it takes weeks you will not have later.

Referral timing against outcome

That last row is the one worth internalising. A client who prepared properly for a TOGC is registered and opted — which is exactly what makes 48-hour funding possible when it fails. A client who assumed the TOGC would work and did nothing has no route.

What to send with a referral

Even an early one benefits from:

• Purchase price, and the VAT amount if known
• Buying entity, and whether it is VAT registered
• Why VAT applies — opted, new building, or unknown
• Completion date, or auction date
• Whether a TOGC is in play
• Senior funding position, and whether a second charge may be needed

If you only have three of those, send three. An incomplete early referral beats a complete late one.

The commercial case

A VAT facility is a smaller fee than the senior deal. It is also frequently the thing that lets the senior deal complete.

The arithmetic is not the procuration fee on the VAT. It is the senior fee you keep, the client who completes, and the next instruction from someone who now thinks of you as the broker who saw it coming.

This guide is general information, not financial advice. Clients should take their own VAT and funding advice.