I am after some advice if possible.
I have client that is self employed and is VAT registered with his self employment. He is a basic tax payer and his wife is also an employed basic tax payer.
My client is thinking of buying 3 derelict cottages that he is going to renovate and in time rent them out. He has asked me which is the best way to do it because he wants 1. to have the VAT back on the building work 2. Not have to charge VAT on the rent when he rents it out.
He has asked me could he do the following:
1. Trade as a limited company with the cottages and register for VAT and rent them out to him and his wife (as a Partnership) at a low price and then them to sub let them out to the customers. Providing they will be under the threshold he will not have to register for VAT. Is this ok to do though?

If he has already paid for the derelict cottages personally is this a problem though?

Thank you in advance


  • collieston
    collieston Registered Posts: 4
    Thank you for your comment. The partnership that would rent the cottages from the company would not be vat registered.
  • kelsmick
    kelsmick Registered Posts: 89
    So he would buy them under one company then rent them under another? Him being a Director/Partner of both companies? What will they do when the sub company reaches the VAT threshold? Keep opening sub companies and avoiding tax?
  • burg
    burg Moderator, FMAAT, AAT Licensed Accountant Posts: 1,441
    As has been pointed out. Your clients wants to have his cake and eat it. Rarely happens in this world! This type of scenario is why we offer free general advice and guidance using subscriptions and encourage clients to ask before they make big decisions. It's far more time consuming and much more of a headache to sort afterwards than dop some good planning before. Of course this doe snot help you or the client.

    There is no legal way around the scenario in question with the outcome the client wants. I would get the client in and go through the various options before he does anything further and makes the mess worse.

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