Vat On Leases

TALLY

Hi everyone,

If you are a VAT registered company in the retail trade and own a building which has two self contained flats that you lease out, would you charge VAT on the invoice that you send to the tennants for the ground rent? Part of the building is used for the business with the flats above being used as living accommodation. Or are these two entirely separate issues?

Thanks for replies.

Poodle

Hi Tally,

The rental income would be exempt for VAT purposes. You may well then get into a partial exemption situation for VAT. See HMRC Notice 706.

Unless you have opted to tax on the building then VAT will apply.

Poodle