Hi all
I have a client who runs a beauty spa. She rents her saloon to therapist to carry out massage and other treatments. Should she be charging VAT on the rent she charges the therapist? The client is vat registered and the therapists are all self employed.
Thanks
Amit Rai
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Replies (1)
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Option to Tax
Rent is an exempt supply (ie, no VAT charged) unless the landlord has Opted to Tax the property, upon which, rent will then become standard rated.
If landlord does not opt, then this is fine. However, any input VAT associated with the upkeep of the building (repairs, etc) will not be VAT reclaimable in full without first performing a partial exemption calculation to dertermine what proportion of input tax relates to wholly exempt and wholly to taxable and if de minimis client may be able to reclaim all input tax anyway - but the calculation has to be done to demonstrate that.