This is madness!

A vat registered trading company pays rent on the business premises but the rent invoices are issued   in the directors’ names. The landlord insisted that the lease was assigned to the directors in a personal capacity rather than to their company, presumably because they are more credit worthy than their new company.

I want to reclaim the vat through the vat registered trading company but I have been told ‘no way Hosé     ‘ as the rent invoices are in the directors’ names. Yet the VAT guide states that input tax can be reclaimed if the supply is for business purposes, which it is and it is paid for by the business, which it is, and that an invoice is retained which it is…….it just happens to be in the wrong name.

 So a colleague suggested that the directors register for vat as a partnership, exercise an option to tax over the property and invoice their company for the rent plus vat. As a result the company can reclaim the vat on the rent because the  invoice will be issued in the company name, the partnership vat returns will be vat neutral as the directors will simply be re-charging the quarterly rent. So everyone is happy……..except me who  wondered why I ever went into accountancy.

 Which method is correct? Members views would be much appreciated