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property available less than 105 days per year

property is available less than 105 days per year however turnover ( sales , income ) is 100k . vat?

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My and my 3 friends

would like to have 4 companies that manage other landlords properties in touristing destination  and rent them out on

holiday websites.

airbnb and booking

each person  ( each company ) will manage

50 properties only 3 months per year

( 90 days)

and will pass to another friend those

50 properties to manage  another 3 months

and so on.

after 12 months management comes back to 1st person.


those 50 properties will be above

uk threshold for vat purposes as combine income will be around £ 200.000 per month

3 x £ 200.000 = 600k month per month

for each person ( company )


However from our accountant expert advice

by creating 4 companies and renting them

for less than 105 days per year under 1 company we could simply be VAT EXEMPT .


Correct or no ?


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09th Dec 2018 18:28

Which will you trust - your expert advice or a comment from me (or some other contributor equally unknown to you) that might contradict that advice?

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09th Dec 2018 18:56


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09th Dec 2018 19:39

I'm afraid you aren't likely to get a meaningful response to your question because:

a. there's a whole lot more information needed to answer your question with more than a yes or no (on the strength of the information given I would have to say no)

b. you're conflating income tax rules with VAT rules. 105 days isn't a factor in deciding the VAT treatment of letting holiday accommodation.

If you have correctly represented what your accountant told you I suggest you find a new advisor. I guess the reason you're on this forum is that you don't trust his or her advice - so it's fair to get a second opinion, but given the nature of what you're asking this is not your best course of action.

I suggest you read VAT notice 700/9 as a starting point, also HMRC's guidance on "VAT Single Entity and Disaggregation", which deals with artificial splitting of businesses. Alternatively, make an appointment with another accountant, but ask first whether he or she is comfortable giving advice of VAT for holiday accommodation and VAT disaggregation.

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to tonycourt
09th Dec 2018 20:43

I agree.

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to tonycourt
10th Dec 2018 05:36

Probably need to add: knowledge of agency. It's not clear from the OP, but that's the only way I can make sense of the numbers. (Else as stated - t/o £100k per fortnight - disaggregation hardly seems relevant.)

But I agree your diagnosis (so far as one is possible based on the limited information available) - the OP and/or their advisor may well be reading direct tax rules as if they were indirect tax rules.

Extending that metaphor, if the OP was a patient and your were provided with at most 25% of the relevant symptoms, would you attempt a diagnosis without a consultation? Really?

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to Tax Dragon
10th Dec 2018 10:38

I agree, the companies are merely managing the property. The 105 day rule has nothing to do with the activities of the company.

Your (well your accountants) theory would mean a majority of estate agents would be VAT exempt which simply isn't the case.

Back to the drawing board.

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09th Dec 2018 22:31

[sigh] ©

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10th Dec 2018 10:20

" good accountant "

Fact is all accountants dont share same knowledge .

Fact is HMRC have different opinion to VAT.

problem :

Company " a" rent residential properties from landlord
and rent them our on airbnb and booking.
Can company pay VAT On Margin ( profits ) rather than
total turnover ?

If company pays rent £ 2000 and will generate £ 2600 turnover they will pay £ 433 in vat .
Profit - > £ 177 that wont cover anything

above presentation is standard

however can we apply vat on profit

and pay £ 100 on £ 600 profit ?

Thanks for exp advice

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to propertyinvestor2018
10th Dec 2018 10:37

propertyinvestor2018 wrote:

Fact is HMRC have different opinion to VAT.

What does this mean ?

You know HMRC run VAT, don't you ?

No, you can't use the margin scheme. It's for goods, not services.

Crazy idea ©

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to lionofludesch
10th Dec 2018 10:43


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to propertyinvestor2018
10th Dec 2018 11:23

Perhaps your business plan is flawed if you can only manage a 6.8% gross profit?

Perhaps for a 6.8% gross profit you should be looking to simplify the business, rather than complicate it by hiving off into four or more different companies.

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