I dont profess ot be a VAT expert here.
My client (Ltd Co) provides standard letting services inasmuch as she take non vatable rents from the public into a client account and then invoice her client for her service. She is soon to become VAT registered as she will go over the limit.
However she wants to buy a property into the business and rent this out to the public. As she will soon be VAT registered will she have to charge VAT on these rents.? She obviously doesnt want to do this as it increases the cost for the tenant. Any help much appreciated.
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I take it your client is having to register for VAT solely as a result of her services in the last 12 months having exceeded the registration limit.
What sort of property does she want to bring into the business - residential or commercial? Rental income is generally exempt, unless there's an option to tax in place, meaning that the business will then have to be aware of and abide by the partial exemption rules.
Yes that is correct. She has inherited some cash and she intends to put this into the business as a director's loan and buy a residential property with it. I am aware of the option to tax but are you able to clarify the partial exemption rules? Can she reclaim reclaim VAT on here expenses at the same time as not charging VAT on the rent. Thanks a lot for you help.
Tony
Yes that is correct. She has inherited some cash and she intends to put this into the business as a director's loan and buy a residential property with it. I am aware of the option to tax but are you able to clarify the partial exemption rules? Can she reclaim reclaim VAT on here expenses at the same time as not charging VAT on the rent. Thanks a lot for you help.
Tony
Yes, exempt.
But she might still be able to reclaim input tax on the house expenses. Look at the partial exemption rules.
You will need to read up on the partial exemption rules, the company may be able to recover the VAT on the exempt business if de minimus.
I assume you have already considered whether the limited company buying this property is a good idea or not.