charging VAT on service charges etc..

bni

propertyman wrote: »

The position on residential service charges for the landlord is that the service charge total is subject to a a simple 20%.

This is a specialised field and is subject to an exemption by HMRC since the early 90's , which it is argued flies in the face of an EU decision that there is no option to not charge VAT.

It is? Isn't residential rents exempt from VAT? I certainly I have never paid VAT on either my rent or the service charge for my flat (and services are paid for by our landlord's company).

Read HMRC's response to the ECJ decision (to add VAT to a service charge) and why it doesn't change the general principle that VAT status is same as rent if service charge is mandated by the lease:

http://www.hmrc.gov.uk/briefs/vat/brief6709.htm

Here is a legal brief after that same decision:

http://www.fladgate.com/pubs/xprPubDetail.aspx?xpST=PubDetail&pub=282

I'm not an expert in this area, so I might be missing something (or a more recent change in policy?)

propertyman

Sorry your reply has absolute nothing to do with the question. You have found the 2 easiest pages you can google :rotfl:

You have conflated rent and service charge where rent is irrelevant to the issue here.

If you re read the Fladgate Fielder link it you would see that they do see the HMRC decision to be at odds.

In light of HMRC’s new guidance landlords should check that they are applying the correct VAT treatment to service charges. HMRC may yet be forced to alter its policy to take account of the ECJ decision in Tellmer so landlords should keep the position under review

Back to the question

1: The provision of services under a lease are treated as a single supply hence 20% across the board.

2: If the OP can procure services via a third party, not an agent, and the lease is general enough in terms to do so, there is scope for making VAT recovery, particularly relevant where there are major works.

propertyman

RLH33 wrote: »

You need an accountant!
Otherwise get an accounting package like sage which will help you to work it out.

You can only charge Vat on vat eligible costs, if they are exempt you cannot charge vat. In your case this will mean that you will have to charge vat on some things but not others, it is not simply the case of adding 20% to the final bill.

No because in most cases all services provided by the LL are under the lease and are treated as a single supply hence VAT on everything or nothing. As two biggies utilities and insurance are not 20% it's a higher charge than you get back.