Letting Agent now charging VAT

chiff

Annie1960 wrote: »

I don't think they can suddenly start charging you VAT without notice. If a company charges VAT, they are supposed to tell customers this before presenting them with the bill - VAT should not be unexpected.

http://www.tpos.co.uk/downloads/TPOE22-2%20Code%20of%20Practice%20for%20Residential%20Letting%20Agents.pdf

See para 5k which relates to TPOS. Check what regulator your agent is registered with (they should have the logo on their stationery and website). Also check your contract to make sure this says nothing about VAT.

VAT registered organisations are supposed to always include their VAT number on their stationery, and are supposed to give customers a vat-inclusive price. The addition of VAT should not come as a surprise, as this removes your right to compare different quotes before agreeing to use their services.

Yes but if the contract is silent on VAT then the charge will be exclusive of VAT. Fine if they're not VAT registered but once they're VAT registered I'd say if the contract is silent then the charge is exclusive of VAT and VAT will be due in addition.

That's not to say that what they have done is correct - and they should really have informed their clients of this.

jjlandlord

chiff wrote: »

Yes but if the contract is silent on VAT then the charge will be exclusive of VAT.

It's the opposite: If the contract is silent then the normal rule is that the quoted price is inclusive of any chargeable VAT.

chiff

jjlandlord wrote: »

It's the opposite: If the contract is silent then the normal rule is that the quoted price is inclusive of any chargeable VAT.

Whoops, sorry!

Annie1960

chiff wrote: »

Yes but if the contract is silent on VAT then the charge will be exclusive of VAT. Fine if they're not VAT registered but once they're VAT registered I'd say if the contract is silent then the charge is exclusive of VAT and VAT will be due in addition.

That's not to say that what they have done is correct - and they should really have informed their clients of this.

This is not what organisations sign up to when they become VAT registered.

There are two separate issues here, which are not necessarily related.

1. When the LA becomes liable for VAT, they need to register, sign to say they will agree with the rules, and start paying VAT.

2. If the LA (or any other organisation for that matter) already has a contract with a customer, then they are not permitted to suddenly add VAT to it.

So, the LA has to pay the VAT, but is not allowed to collect it for this customer. The two issues are not related.

Presumably, when the contract is up for renewal, they will quote a price + VAT, and the LL can then decide whether to not to agree to the new contract.

chiff

Annie1960 wrote: »

This is not what organisations sign up to when they become VAT registered.

There are two separate issues here, which are not necessarily related.

1. When the LA becomes liable for VAT, they need to register, sign to say they will agree with the rules, and start paying VAT.

2. If the LA (or any other organisation for that matter) already has a contract with a customer, then they are not permitted to suddenly add VAT to it.

So, the LA has to pay the VAT, but is not allowed to collect it for this customer. The two issues are not related.

Presumably, when the contract is up for renewal, they will quote a price + VAT, and the LL can then decide whether to not to agree to the new contract.

No, they need to account for VAT on their supplies made once they are registered for VAT - whether they are able to charge that onto their customer or not is the issue.

System

jjlandlord wrote: »

It's the opposite: If the contract is silent then the normal rule is that the quoted price is inclusive of any chargeable VAT.

That is correct the LA will need to absorb the VAT themselves

Annie1960

chiff wrote: »

No, they need to account for VAT on their supplies made once they are registered for VAT - whether they are able to charge that onto their customer or not is the issue.

Charging VAT to the customer is the issue, as the LA has just sent a bill to the OP including VAT.

The OP should not pay the VAT. However, the LA will need to pay the VAT to HMRC.

The latter is not dependent on the former.

chiff

Annie1960 wrote: »

Charging VAT to the customer is the issue, as the LA has just sent a bill to the OP including VAT.

The OP should not pay the VAT. However, the LA will need to pay the VAT to HMRC.

The latter is not dependent on the former.

Yes, I think we agree that charging VAT to the customer is the issue.
The LA will only need to account for the VAT to HMRC totalling the value of the supply. So if the supply is £120 before and after the LA became VAT registered they will need to pay the £20 to HMRC rather than charging £120 plus 20% VAT to the customer and paying over £24 to HMRC.

JasonLVC

jjlandlord wrote: »

It's the opposite: If the contract is silent then the normal rule is that the quoted price is inclusive of any chargeable VAT.

Yep, plenty of case law that confirms where VAT is silent, any price is deemed to be VAT inclusive.