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VAT on commercial property divided and let as unit

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I have a client, who leased a few commercial properties and then let again with increased rent. In some cases, he divided the property into units and let the units to different businesses. The collective rents are now more than the VAT registration threshold. I'm not sure whether the client needs to register for VAT as he doesn't charge a commission and the total rental income received is his income and rent paid to the landlords are the cost of sales. Since it looks like trading, does he need to register for VAT?

Thanks in advance for your valuable input. 


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12th Dec 2018 11:44

Option to tax????

Leasing commercial property is by default an exempt supply (though beware storage/ self storage which can be different)

p.s. we have a rent roll (commercial) in the hundreds of thousands and charge no vat on any of it, nor in the main entities are we registered for vat ( These days only one of our companies registered with a £90,000 p.a. rent roll ), the fact is we do not normally opt to tax our properties, which is a deliberate decision(large number of small non vat registered tenants and a lot of charities /similar as tenants)

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