Rent on jointly owned property & Flat rate VAT

Rent on jointly owned property & Flat rate VAT

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Is the rent on a property owned by a husband and wife excludable from the Flat Rate VAT computation for the husband? Is the property ownership seen as a separate legal entity? 
Will HMRC see it that way? I don't want to ask them as he already registered for Flat Rate, and I don't know if that was a mistake...

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chips_at_mattersey
By Les Howard
02nd Jan 2013 12:01

Flat Rate VAT

Where the property income applies to the partnership, and not the sole trader, it is correctly excluded from the income for the FRS calculation. Do make sure the paperwork is consistent - is the property owned jointly? What about insurance; separate bank account, etc? Is income tax paid by the partners on the rental profit?

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By david5541
02nd Jan 2013 12:40

OPTION TO TAX

ALSO CAREFULLY CONSIDER "OPTION TO TAX" ELECTIONS FOR NOT JUST THE PROPERTY INCOME BUT  ALSO PURCHASE- HOW WAS VAT ON PURCHASE ACCOUNTED ACCOUNTED FOR? (I.E. make sure no option to tax elections are in force)

 

this is easily missed becuse if the partnership is charging vat on any other rents.... the partnership needs to have an option to tax in force.the paperwork needs to be in order

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By RG
03rd Jan 2013 12:39

Non-business?

It's domestic. The rental properties are bungalows which have been built on land owned by the couple. The workshop that the husband uses for his car mechanic trade is also on this land.

Does that definitely make it non-business?

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By pedant
03rd Jan 2013 12:50

Residential lettings

There's no Option to Tax available.

No VAT chargeable/recoverable.

 

The husband is a sole trader.

The letting income is joint.

No implications for FRS.

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