VAT: Buildings and Business

VAT: Buildings and Business

Didn't find your answer?

Client has the following:

A property which client pays VAT on rent but sometimes lets out rooms. Should VAT re charged on that rent - the client is not VAT registered.

Also, client provides educational services as was told by the previous accountant that for that the VAT threshhold is doubled. Is this correct?

Many thanks
eprof
eprof

Replies (1)

Please login or register to join the discussion.

avatar
By spidersong
24th Nov 2008 09:23

No and No
If a person is not VAT registered then they cannot charge VAT.

The fact that a landlord charges a tenant VAT doesn't affect the tenants supplies in the course of any subletting. In order to charge VAT a VAT registered business must notify an option to tax to HMRC, this option to tax is specific to the business making it, and for any other user of the building to charge VAT they would need to make and notify their own option to HMRC if they so desired. An option to tax does not apply to most descriptions of residential building.

As to the second point, where on earth did they get that idea? The registration limit is set in Para 1(1) of schedule 1 to the VAT Act 1994, and all it mentions is one limit for a persons taxable supplies. The calculation of what are taxable supplies has some complexity for Tour Operators who operate on a margin basis, but for everyone else it's reasonably straightforward, and contains no 'doubling' caveat for educational supplies or anything else.

Where some of the idea may come from is that many educational supplies are exempt from VAT and so do not count towards the threshold (private tuition provided by individuals, vocational training provided using funds available under the Employment and Training Act 1973). Is this perhaps the case here, are you happy with the liability of your clients supplies in this case?

Thanks (0)