I thought that if, say, you bought milk for a premises and shared it with sub-tenants/other tenants and agreed to charge a nominal sum each month (or bought milk to cater for an event), there would have to be VAT included on this recharge invoice.....even though the milk was 0% VAT when originally bought.
Where does it stop? If you are sharing a space with another company and there is no sub-tenant agreement and you need to simply recharge all costs to this company at an agreed proportion......do you add VAT to everything including rent/rates?? Obviously rates are not standard VAT (I treat them as T9 on Sage - outwith the scope). The rent has no VAT included either - I treat rent as same as rates in terms of VAT. Utilities and the like are easy as I would charge the net amount per the invoice (at the agreed proportion) and add VAT to this..........
But should I add VAT to the outwith the scope expenses such as rent and rates??
Is there a choice here or is there a strict rule??
Check out this link which explains about recharges and disbursements. I would say if you are a VAT registered company and you recharge rent/rates to your tenants then you should charge VAT on it. With items that have already had VAT charged on them you can choose to recharge the net amount plus VAT or to charge VAT on top.
