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VAT on Property Management Repairs and Services

Do I have to change VAT to customers on non VAT repairs and services?

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I work for a small property management (factoring in Scotland) company.

The homeowners appoint us to manage their common property. We organise repairs and services on behalf of the clients and charge a management fee for doing so. 
My question is, if a contractor has not charged us VAT, should we be adding VAT to this on our invoice when we send it out? We charge VAT on management fee and other admin. I worked for a much larger company that did the same thing and we did not charge VAT where the supplier was not VAT registered however our accountant believes we should. 

 

Should we be charging VAT on non VAT items? How did my previous employer get away with not doing it?

Any help is appreciated. 
 

 

Replies (10)

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By Paul Crowley
05th Oct 2020 07:47

I agree with your accountant if you charge it on your invoice.
The alternative is to treat costs by traders as disbursements, to which you cannot add a fee.
The latter is the normal practice.
What exactly do you do with the VAT registered traders bills. Are you charging VAT on these and treating them as costs to your business, so reclaiming VAT?

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Replying to Paul Crowley:
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By lionofludesch
05th Oct 2020 08:35

Quote:

The alternative is to treat costs by traders as disbursements, to which you cannot add a fee.

I would say you cannot add a mark-up. I think you can charge a fee for your management work.

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By lionofludesch
05th Oct 2020 08:25

Who is supplying what to whom ?

If these trademen didn't get paid, whom would they sue ?

You ? Or the property owner ?

The answers to these questions are key to your solution.

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paddle steamer
By DJKL
05th Oct 2020 09:00

Sound like items running through a client account/factoring account. (Note we are also in Scotland)

In my second job (property agents) we rebill such costs as we receive back to the owners all in terms of the relevant Deed of Condition regarding the property (Which if you do not have you ought to get as it informs your rights and powers as managing agent/factor). Our fee is just one more cost to be factored back to the owners, by chance it has vat on it but just because we are vat registered.

So if say 35 owners each liable for an equal share we list all the costs the factoring has incurred in a period (usually quarterly) including our own fee for factoring and bill each owner 1/35th. We usually hold a float from each flat (again usually within the D of C) so we are not out of pocket. We have a unique designated bank account for each property we factor.

As far as I can see the only vat supply we make is our own fee, everything else we do/perform as appointed agent of the owners.

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By sphericalaccountants
05th Oct 2020 09:30

Do you need to keep contractor's invoice for owners to access (if needed) and do you make contractor's invoice part of the service charge accounts as it is? If yes, then you cannot charge VAT like you used to do at your previous employer.

If you are completely disregarding contractor's invoice and generating your own invoice instead for the work that contractor has carried out then you will charge VAT. That's when owners will only have an access to your invoice and its your invoice that will become part of the service charge accounts.

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By frankfx
05th Oct 2020 09:49

In the light of the responses have another word with your accountant.
You really need to understand the business methodologies of the business sector.

Not just the how.

But Why .....certain transactions are treated in a particular way.

Perhaps now that you are armed with a little more knowledge you can undertake some applied research

The issues go well beyond accounting and vat.

They are legal and contractual niceties.

Hence understand the WHY.

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By janesneddon
09th Mar 2022 14:56

Hi,

Can I ask, as a customer of a property factor, can the factor claim VAT back for the services procured on our behalf, and if so should they invoice us for the full amount including the VAT, so they benefit, or should we be invoice without the VAT.

Thanks

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Replying to janesneddon:
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By lionofludesch
09th Mar 2022 15:11

Quote:

Hi,

Can I ask, as a customer of a property factor, can the factor claim VAT back for the services procured on our behalf, and if so should they invoice us for the full amount including the VAT, so they benefit, or should we be invoice without the VAT.

Thanks

Who is supplying what to whom?

It sounds to me like these services are being supplied to you - albeit the factor is making the arrangements. As the services are not supplied to the factor, he cannot recover the input tax.

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Replying to lionofludesch:
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By janesneddon
09th Mar 2022 15:53

Thank you! Yes these services are being supplied to us.

I wanted to check as were are not happy with the way the factor operates, thank you for responding.

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Replying to janesneddon:
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By lionofludesch
09th Mar 2022 16:20

Quote:

Thank you! Yes these services are being supplied to us.

I wanted to check as were are not happy with the way the factor operates, thank you for responding.

You don't say how the factor operates, so I'm afraid you'll need to decide for yourself.

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