Letting Commercial Property (VAT Question)

OuiMaisNon

Hi Guys

Sorry if this is in the wrong forum, I didn't know wether to put it under tax or renting, so it went here.

So basically i'm just about to enter into a licence agreement to let out a workshop/office property to start up a small business and although most places don't charge VAT on the monthly licence fee, this place does.

I know i'm eligible for SBRR on the rateable value of the property but is there any way to become exempt or lower the cost of the VAT on the property being a small business?

Apologies if this is a silly question

Cheers

daveyjp

Better under the small business forum.

You can be 'exempt' by becoming VAT registered.

phill99

As above. You need to register for VAT in order to recover it.

martindow

phill99 wrote: »

As above. You need to register for VAT in order to recover it.

Nearly every expense of your business will have a VAT element. If you register for VAT you will have to charge VAT on your sales adding an extra 20% on your prices which will make you less competitive.

If your business is making a profit you will be collecting more VAT than you can claim back, so will make quarterly payments to HMRC.

You need to discuss this with an accountant to see if registering is advisable.

eddddy

martindow wrote: »

...
If you register for VAT you will have to charge VAT on your sales adding an extra 20% on your prices which will make you less competitive.
...

... unless your customers are VAT registered businesses.

In that case, registering for VAT will probably make you more competitive, because you can reclaim 'Input VAT', rather than treating it as an additional cost.

martindow

eddddy wrote: »

... unless your customers are VAT registered businesses.

In that case, registering for VAT will probably make you more competitive, because you can reclaim 'Input VAT', rather than treating it as an additional cost.

Quite right - if it's B2B VAT registered businesses it is usually a good idea to register below the threshold so you can claim VAT on expenses.

If your customers are private individuals or small unregistered businesses it is usually a disadvantage to register until your turnover forces you to.