Hi all
Regarding VAT on commercial rent: If my company is able to charge VAT on its health services which are VAT exempt (and therefore unable to claim back VAT paid on rent)..... Can i set up an additional limited company in order to:
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Be the tenant and sublet to my health business
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Be in a position to claim VAT back via that company instead
Would be grateful to hear your thoughts or other ideas if you have them.
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Replies (4)
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The new company which acts as tenant will be able to claim VAT back on its rent expense, but it will have to charge VAT on the income it receives from subletting to the original company (and the original company still won't be able to claim this VAT) so you'll just be back where you started but with additional admin costs of running two companies.
It would be worth talking to an accountant to discuss alternate arrangements.
Yeah - but if you set up this intermediary company to claim the VAT back, you'll need to charge VAT to your VAT exempt company.
So nothing will change.
The best thoughts and ideas is for you to speak to your Accountant.
What you propose is potentially possible but only in a very narrow set of circumstances, so this requires precision and detail which only speaking with an advisor will achieve.
Issues include :-
i) any option to tax may be disapplied where the landlord and tenant are connected persons and where the tenant is an exempt or partially exempt business,
ii) if the option to tax is not disapplied, any recharges of rent would have to be at market value because MV rules apply when between connected persons and the recipient of supplies is an exempt or partially exempt business.
There are several other considerations such as capital goods scheme and the perils of opting to tax commercial property and of course also other issues such as holding property in a separate company from the trade and also please note that this forum T&C's specifically state that bespoke advice cannot be given to business owners, the forum is for Accountants to share information with other Accountants.
People who DIY their healthcare or self-diagnose via Google usually end up making a mess of things, the same applies to healthcare professionals trying to DIY complex tax legislation.
You need to ask a good VAT Consultant for an opinion - it needn't be that expensive, certainly a lot cheaper than setting up and running a new company!
