Auction Company sold my commercial property at a price including VAT?

vincent.lee

Hi.

I have a bit of an issue here, and was hoping to get some help.

I have a commercial property which has been with an auction company for quite some time.

A month ago, a received a call from the auction company. I was told that an offer came in at £40,000, not at auction. I accepted it.

Come this week, I've been told for the first time that the client was under the impression that £40,000 was inclusive of VAT.

I am VAT registered. The Auction Pack clearly states that the purchase will be subject to VAT.

I received an e-mail chain showing the general manager of the auction company had told the client that the offer of £40,000 INCLUDING VAT was accepted.

My lawyer is advising me to revoke my option to tax. My issues are:

This is not my fault. I didn't agree to £40,000 including VAT, and the auction pack clearly states the final purchase price is subject to VAT.

Revoking my option to tax will mean that I cannot claim VAT on the auction house fees, and the lawyer fees, which will cost me at least £500.



Is the auction house not liable to pay me money lost? What would be my options here?

My lawyer doesn't seem to be helpful. He seems to be a bit of a pushover...

Pennywise

The words "subject to VAT" is ambiguous. It can mean VAT to be added, or it can mean including VAT. You should have made it clear it should have been "plus VAT". Looks like this is just a simple case of misunderstanding.

tebthereb

Subject to VAT sounds unambiguous to me.

vincent.lee

Pennywise wrote: »

The words "subject to VAT" is ambiguous. It can mean VAT to be added, or it can mean including VAT. You should have made it clear it should have been "plus VAT". Looks like this is just a simple case of misunderstanding.

'subject to tax' clearly means that VAT will be added to the purchase price.

It always has been. Go to any seller who has their products or services listed as 'subject to tax' and it's clear that VAT will be added on the price listed.

Pennywise

Surely if you revoke your option to tax, there'll be no VAT charged on the sale and the buyer won't be able to reclaim the VAT meaning they'd be out of pocket and probably pull out of the sale.

vincent.lee

Pennywise wrote: »

Surely if you revoke your option to tax, there'll be no VAT charged on the sale and the buyer won't be able to reclaim the VAT meaning they'd be out of pocket and probably pull out of the sale.

They're not VAT registered, so they wouldn't be able to reclaim the tax.

The issue is that the auction house told me I received an offer of £37,000, which the articles of roup states is subject to VAT.

The auction house misled by me (the seller) and the buyer.

BoGoF

Not really a tax issue though is it. More a contractual issue between you and the auction house.

Sibbers123

I think what will determine will happen is the exact wording of the email from the auction house with the offer says. If it says £40,000 with no reference to VAT, I would say that you have in fact not accepted the offer that was originally made to you by the purchaser and therefore no contract exists - the agent (the auction house) has communicated the offer incorrectly and the purchaser could sue to auction house for damages.

If the email said £40,000 including VAT then you have essentially accepted an offer of £33,333 + VAT.

pjread

It's worth checking the agreement with the auctioneers in detail before doing anything rash though; if they are your agent (and so possibly had agency to commit you to the deal) you *might* find you're compelled to proceed.



Of course you could then pursue them for losses, where demonstrating the wording of communications is going to be the most important factor - but that'd be between you and the auction house (and quite probably the courts)

prowla

It's normal for B2B deals to be plus VAT.