Rent a chair

Rent a chair

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If it is accepted that a stylist is providing services directly to the public and is paying rent to the salon under a 'rent a chair' agreement, does the rent fall within the scope of VAT for the salon ??

We have a client currently verging on the VAT registration threshold who currently does not rent any chairs and in so doing the combined income will exceed the registration threshold, but if the rent is not subject to VAT and considered a standard rated supply, the salon will be able to avoid registering for VAT.

What also is the ruling where in addition to rent, the salon charges the stylist a service charge based on a % of income they generate. Would the service charge have to be declared by the salon as a standard rated supply or would this also fall outside the scope of VAT ??

Do HMCE have any official guidance on this sector ??
Paul Dorrington

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By John Savage
26th Apr 2006 22:39

Be Careful here
'Rent' paid to a salon for a 'rent a chair' agreement is normally considered a taxable supply for the use of facilities, and not exempt rent. Therefore the monies paid (which is normally a fixed percentage of the fees charged to the public by the stylist) should be included within the salon's takings.

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By Malcolm Veall
27th Apr 2006 13:38

Consult the Federation
This is an old chestnut for this trade. John is right but the presumption of VATable supply of services rather than actual rent can be rebutted. Moving from a percentage of takings to a fixed rent is indicative.

The National Hairdressing Federation has useful info on this, if the client is a member consult them, they can supply model contracts for different forms of chair rent. http://www.nhfuk.com

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By howarthco
27th Apr 2006 15:50

try nhf
i think that the national hairdressers federation is currently battling c&e with this so perhaps try them

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