Hi I hope someone can help me here, I am helping an engineering firm whilst they employ a regular bookkeeper .I have come across an issue regarding VAT. The company are invoiced for rent on two workshops from, I assume, a rental agency. The invoice received does not charge vat and there isn't a vat registration on the invoice. The company I am working for also has another company who rent the second unit. The engineering company then invoice the second company for the other unit, charging them the same amount that they were invoiced for but plus VAT....is this right? Any help would be appreciated.
It is up to the person renting out the property whether they charge VAT or not. If they opt not to charge VAT they can't reclaim VAT on anything relating to the property.
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Never buy black socks from a normal shop. They shaft you every time.
Hi Peasie...thanks for taking the time to answer the question and so to clarify: the company who is subletting the unit can definitely charge vat if they want to?
You are stating that they are looking to opt to tax a building that they do not own.
If they opt to tax they wil have six months to change their minds and then they cannot change the option for another twenty years.
The letting agreement must state that there is an option to tax or the owners must inform the tennant in writing of the intention to tax which gives them time to terminate the agreement before such tax is applied.
Tennants who are not VAT registered or provide only exempt supplies will be disadvantaged by a landlords opting to tax. You may also find the property difficult to subsequently let if other similar properties in the area are not taxed.
I stand to be corrected but my understanding is that a tennant cannot opt to tax a sub tennant if the owners of the property are not taxing them.
Considering the above the decision to tax should not be taken lightly.
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hi Seamus
thanks for this. I will speak to their accountant and express my concerns (it was the accountant that told them to do this) re charging vat on the sublet unit.
