Hyssop Ltd requires advice on the value added tax (VAT) implications of the sale of a warehouse.

Hyssop Ltd:
– Is a UK resident trading company.
– Prepares accounts to 31 December each year.
– Pays corporation tax at the small profits rate.
– Is registered for VAT.
– Leased a factory on 1 February 2015.

Acquisition of a factory:
– Hyssop Ltd acquired a 40-year lease on a factory on 1 February 2015 for which it paid a premium of £260,000.
– The factory is used in Hyssop Ltd’s trade.

Disposal of a warehouse:
– Hyssop Ltd has agreed to sell a warehouse on 31 December 2015 for £315,000, which will give rise to a chargeable gain of £16,520.
– Hyssop Ltd had purchased the warehouse when it was newly constructed on 1 January 2012 for £270,000 (excluding VAT).
– The warehouse was used by Hyssop Ltd in its trade until 31 December 2014, since when it has been rented to an unconnected party.
– Until 1 January 2015, Hyssop Ltd made only standard-rated supplies for VAT purposes.
– Hyssop Ltd has not opted to tax the warehouse for VAT purposes.
– The capital goods scheme for VAT applies to the warehouse.

Required:

(c) Explain, with the aid of calculations, the VAT implications of the disposal of the warehouse on 31 December 2015. (4 marks)