VAT on Rent

VAT on Rent

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One of my clients has just purchased a industrial unit which he has rented out, as we thought there would be VAT on the purchase we registered the company for VAT, it turns out there wasn't in the end.  But is this is same as opting to VAT, as I realise that if we opt to VAT we then have to charge VAT on the rent.

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By johngroganjga
21st Oct 2013 10:50

Registering for VAT is not the same as opting to tax a specific property.  Yes if your client opts to tax they will have to charge VAT on the rents.

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By Democratus
21st Oct 2013 10:52

Option to tax is on the building

Simplistically, if the building comes with OTT then VAt should be charged, both on the sale to your client and on rents charged. If not then no issue. It's not the same as registering for VAT.

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By User deleted
21st Oct 2013 11:25

To clarify (correct?) the previous post

A building does not "come with OTT" - it is up to each party to elect or not. The vendor's option has no direct effect whatsoever on the rents charged by the purchaser.

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chips_at_mattersey
By Les Howard
21st Oct 2013 11:27

Revoke the option?

In some circumstances you can revoke an option to tax. You may wish to consider this. There is a 6-month window, although there are various restrictions and conditions as well.

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By shaun king
21st Oct 2013 12:59

No option

If OP is right and they registered for VAT because they wanted to recover the VAT charged then you need to ascertain whether an OTT has been exercised and if not you will want to de register the company for VAT either because it makes no taxable supplies or is below the registration limits.

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