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VAT on letting agent

New client who is a letting agent arranges repairs and cleaning for landlords - part of VAT T/O?

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A new letting agency client has come to us and they are approaching the VAT threshold.

Part of the service they provide is to arrange for repairs/cleaning on behalf of the landlords. This is then deducted from the rent recieved from the tennants (along with their management fee) with the balance being paid to the landlord each month.

There is no markup on the costs, but the invoices are in the letting agency name.

Do these recharged costs count as part of the VATable turnover? My feeling is not as they are merely acting as agents for the landlord and all payments come from the client account, but I don't want to miss something.

Thanks in advance

Replies (8)

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RLI
By lionofludesch
29th Jul 2020 11:47

Probably not but you need to look at the contract.

Who is supplying what to whom ?

If the cleaner/joiner/plumber doesn't get paid, who will he sue ?

The agent ? Or the property owner ?

Establish that and you have your answer.

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Replying to lionofludesch:
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By leicsred
29th Jul 2020 12:08

Thanks, I will ask for a copy of a standard landlord agreement.

I would imagine the tradesmen would think they would chase up the agent though (not specifically in this case - but generally).

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Replying to leicsred:
RLI
By lionofludesch
29th Jul 2020 12:11

leicsred wrote:

Thanks, I will ask for a copy of a standard landlord agreement.

I would imagine the tradesmen would think they would chase up the agent though (not specifically in this case - but generally).

Might be the agent's Achilles heel.

The tradesman needs to know his customer is the property owner.

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Hallerud at Easter
By DJKL
29th Jul 2020 11:54

How the agent intromits re these, via the firm account or the client account, may be worth checking?

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Replying to DJKL:
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By leicsred
29th Jul 2020 12:02

They are all paid through the client account, only the management charge for the property is transferred to the business account.

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Replying to leicsred:
RLI
By lionofludesch
29th Jul 2020 12:09

leicsred wrote:

They are all paid through the client account, only the management charge for the property is transferred to the business account.

To whom does the supplier address his invoice ?

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Replying to lionofludesch:
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By leicsred
29th Jul 2020 12:19

Definitely to the agency on all the invoices I have seen

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Replying to lionofludesch:
Hallerud at Easter
By DJKL
29th Jul 2020 12:32

Re the agency I am involved with we get our tradespeole, when we can, to address invoices to :

Name of Landlord
C/O Name of Agent

I think with these the intent is to intromit for the client and am therefore not convinced, even if the invoice is addressed to the agent, that the agent is then making an onward supply.

The trouble with residential property is that generally vat is of no interest to the particular landlord so invoices in incorrect names are often ignored by agents.

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