The Sipp/Ssas provider will then work with you to see if the wider proposal stacks up, and they will help identify the challenges that lie ahead.
Part purchase – the key challenges
Of course every scenario is different, but part purchase of a commercial property will throw up various challenges including:
a) Other owner – who is the other legal owner of the property? The wider risks of joint property ownership are reduced if the other legal owner is the client personally or it is their company.
b) VAT – Is the property 'opted to tax' and subject to VAT? If so, the pension scheme will have to create a 'VAT partnership' with the other legal owner. Only one VAT return for the whole property is acceptable to HMRC. Specialist VAT accountants can assist with this VAT partnership.
c) Mortgage – Is the Sipp/Ssas or the other owner borrowing funds to finance their share of the property purchase? If so, the bank really needs to understand the wider transaction and they are likely to insist on first charge security over the entire property.
Jeff Steedman is head of Sipp/Ssas business development at Xafinity
