Buying a House at Auction - A Question on Fees.

[Glassman]

Two 'special conditions' stand out:

"The Buyer shall pay to the Seller a contribution towards the Seller’s legal costs in the sum of £1,000 plus VAT".

"The buyer shall pay the seller a fee of six thousand plus value added tax of the purchase price on completion as a contribution towards the sellers costs and administration. No invoice will be provided."

Is this normal when buying a house at an auction? Seems a bit odd that no invoice will be provided. Someone has to be VAT registered, so what's the position here?

[EW109]

Glassman said:

Two 'special conditions' stand out:

"The Buyer shall pay to the Seller a contribution towards the Seller s legal costs in the sum of £1,000 plus VAT".

"The buyer shall pay the seller a fee of six thousand plus value added tax of the purchase price on completion as a contribution towards the sellers costs and administration. No invoice will be provided."

Is this normal when buying a house at an auction? Seems a bit odd that no invoice will be provided. Someone has to be VAT registered, so what's the position here?

The provision that "No invoice will be provided" in the case of a fee subject to VAT seems very odd given the general obligation to provide a VAT invoice.

[LooneyTunes]

EW109 said:

The provision that "No invoice will be provided" in the case of a fee subject to VAT seems very odd given the general obligation to provide a VAT invoice.

Indeed. https://www.gov.uk/hmrc-internal-manuals/vat-trade...

Is this a regular auction or one of the "Modern Method of Auction" jobbies. If the latter, it's not really a proper auction... just a fee stitch up.

[Glassman]

The opening salvo on the legal firm's About Us page:

<legal firm's name> was built to change the way people experience legal services.

[Megaflow]

It seemed a little rich putting those conditions on the sale, but at least they are up front about it, until I got to the part about not providing an invoice, that is a dodgy as...

[Jeremy-75qq8]

I buy at commercial auctions.

About 10% of listings have this sort of " contribution ".

It is usually straightforward. £x towards fees.

I don't see the point of having 2 such payments and. It providing an invoice is odd.

[JoshSm]

Looking at

"The buyer shall pay the seller a fee of six thousand plus value added tax of the purchase price on completion as a contribution towards the sellers costs and administration. No invoice will be provided."

that's been hacked around from something else - the 'of the purchase price' bit makes no sense.

And no invoice? Why?

All looks iffy.

[Countdown]

Glassman said:

Two 'special conditions' stand out:

"The Buyer shall pay to the Seller a contribution towards the Seller s legal costs in the sum of £1,000 plus VAT".

"The buyer shall pay the seller a fee of six thousand plus value added tax of the purchase price on completion as a contribution towards the sellers costs and administration. No invoice will be provided."

Is this normal when buying a house at an auction? Seems a bit odd that no invoice will be provided. Someone has to be VAT registered, so what's the position here?

That is odd.

The seller has to be VAT registered in order to charge VAT in the first place? And (assuming they are) there is literally no cost to them in providing a VAT invoice.

To put it another way - if you ARE VAT registered then provide a VAT invoice, if you're not VAT registered just charge £7,200.

[Glassman]

Countdown said:

Glassman said:

Two 'special conditions' stand out:

"The Buyer shall pay to the Seller a contribution towards the Seller s legal costs in the sum of £1,000 plus VAT".

"The buyer shall pay the seller a fee of six thousand plus value added tax of the purchase price on completion as a contribution towards the sellers costs and administration. No invoice will be provided."

Is this normal when buying a house at an auction? Seems a bit odd that no invoice will be provided. Someone has to be VAT registered, so what's the position here?

That is odd.

The seller has to be VAT registered in order to charge VAT in the first place? And (assuming they are) there is literally no cost to them in providing a VAT invoice.

To put it another way - if you ARE VAT registered then provide a VAT invoice, if you're not VAT registered just charge £7,200.

The VAT is on the purchase price.

So, for a winning bid of 300k the buyer is handing over 60k in shoe box, additional to the purchase price (and other fees).

[Jobbo]

You probably have to pay fees to the auction house and some other costs (e.g. reimbursing search fees) too, so check everything very thoroughly. Spotting what the costs on top of the price are is a bit of an art with property auctions.

There shouldn't be VAT on the purchase price if it's a residential property.

[98elise]

Glassman said:

Countdown said:

Glassman said:

Two 'special conditions' stand out:

"The Buyer shall pay to the Seller a contribution towards the Seller s legal costs in the sum of £1,000 plus VAT".

"The buyer shall pay the seller a fee of six thousand plus value added tax of the purchase price on completion as a contribution towards the sellers costs and administration. No invoice will be provided."

Is this normal when buying a house at an auction? Seems a bit odd that no invoice will be provided. Someone has to be VAT registered, so what's the position here?

That is odd.

The seller has to be VAT registered in order to charge VAT in the first place? And (assuming they are) there is literally no cost to them in providing a VAT invoice.

To put it another way - if you ARE VAT registered then provide a VAT invoice, if you're not VAT registered just charge £7,200.

The VAT is on the purchase price.

So, for a winning bid of 300k the buyer is handing over 60k in shoe box, additional to the purchase price (and other fees).

Sounds like a tax dodge of some sorts. CGT and Stamp Duty saved on the purchase? Clearly it's not VAT otherwise they could just provide a VAT invoice.

Edited by 98elise on Monday 7th September 11:37

[JQ]

98elise said:

Glassman said:

Countdown said:

Glassman said:

Two 'special conditions' stand out:

"The Buyer shall pay to the Seller a contribution towards the Seller s legal costs in the sum of £1,000 plus VAT".

"The buyer shall pay the seller a fee of six thousand plus value added tax of the purchase price on completion as a contribution towards the sellers costs and administration. No invoice will be provided."

Is this normal when buying a house at an auction? Seems a bit odd that no invoice will be provided. Someone has to be VAT registered, so what's the position here?

That is odd.

The seller has to be VAT registered in order to charge VAT in the first place? And (assuming they are) there is literally no cost to them in providing a VAT invoice.

To put it another way - if you ARE VAT registered then provide a VAT invoice, if you're not VAT registered just charge £7,200.

The VAT is on the purchase price.

So, for a winning bid of 300k the buyer is handing over 60k in shoe box, additional to the purchase price (and other fees).

Sounds like a tax dodge of some sorts. CGT and Samp Duty saved on the purchase? Clearly it's not VAT otherwise they could just provide a VAT invoice.

Definitely feels like a tax dodge. Effectively paying £240,000 for the house and £60,000 for the flea ridden 20 year old sofa (costs and admin).

[Mr Pointy]

How about a link OP?

[JoshSm]

Glassman said:

The VAT is on the purchase price.

So, for a winning bid of 300k the buyer is handing over 60k in shoe box, additional to the purchase price (and other fees).

I read it as being £6k+VAT, and the 'of the purchase price' was a remnant of an earlier version where the term starting out from a percentage of the total, then being edited into a fixed sum.

In any case it's really badly drafted.

[Glassman]

Mr Pointy said:

How about a link OP?

It will only be to the property. The legal pack is sent to interested parties.

Which bit do you want to see?