Leashold repairs and VAT

Leashold repairs and VAT

Didn't find your answer?

Where a tenant engages a builder to do some repairs on a leasehold property (to maintain it to original condition in accordance with the lease), this does not seem to meet the basic requirement for input tax, that the supply must be received by the tenant. In this case, it seems to be received by the landlord (his asset being altered).

I imagine the VAT in such circumstances is routinely claimed, but wonder what the thinking is - can we argue that the supply is in some sense received by the tenant?

It would seem unfair if the tenant could not recover the VAT.

Replies (3)

Please login or register to join the discussion.

avatar
By stt
12th Sep 2012 13:45

leashold interest?

 

Thinking about it, I imagine the supply is being received by the tenant as the leaseholder, which is a legal interest (just as freehold is). So it's the tentant's 'asset' that is being maintained. Hence the VAT should be claimable.

Any thoughts?

Thanks (0)
avatar
By shaun king
12th Sep 2012 16:00

Assuming it is a tenant repairing lease then the Input TAx incurred is the tenants Input tax as it is for the purpose of his buiness where he is obliged under the terms of the lease to maintain the property. It is no different to the leasing of a car - the asset belongs to the leasing company but the obligation to maintain is the leasse's 

Thanks (1)
avatar
By stt
12th Sep 2012 16:19

Thanks Shaun, it was part of the definition of input tax ('VAT on the supply to him of any goods or services') that was concerning me, not whether it was for business purposes (quite happy to claim against tax).

I can only reason as above, that the supply is to the tenant as the leaseholder (the leashold asset is in a sense being improved).

Similar I suppose to repairing a leased car.

 

Thanks (0)