VAT on Car Parking

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JanetP
JanetP Registered Posts: 7
in VAT
Property management company is charging gross for private car parking (i.e. £1,800 pa vat inclusive). Is the vat redeemable by the tenant?
Property is non VAT opted hence the 'gross' invoice.
Your advice would be welcomed.

Comments

  • Dinky
    Dinky Registered Posts: 26
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    If there is no vat on the invoice then there is nothing for the tenant to reclaim.
  • JanetP
    JanetP Registered Posts: 7
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    Precisely, but if the lease specifies VAT on the car space on a non-opted property, then should there be a valid VAT invoice or should it be charged gross?
    What I am trying to ascertain is which way should this actually be billed. i.e. the Landlord declares what they have charged, however as the property is non-opted, the tenant cannot reclaim.
    That's the problem, the tenant is insisting he should be able to reclaim.
    I am saying that he cannot because of the VAT option of the property. i.e. all costs are gross.
  • Dinky
    Dinky Registered Posts: 26
    edited January 2017
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    I think you have answered your own question - all costs are gross because there is no option to tax. I don't have the benefit of seeing the wording in the lease to be able to comment further.
  • JanetP
    JanetP Registered Posts: 7
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    Great, thank you. All I have to do now is try to substantiate that!
  • RyanMIP
    RyanMIP Registered Posts: 50
    edited January 2017
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    What is a non-opted property?
  • JanetP
    JanetP Registered Posts: 7
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    Ryan, commercial property Landlords have the option to elect to waive the exemption to VAT. This is normally done in the case of older properties that may be due for refurbishment or there is a large irrecoverable portion of costs. Obviously there is a benefit for them to be able to reclaim the VAT on expenditure. All new properties now have to be 'VAT opted'.
    'Non-opted' simply means that the status is that Rents, S/C etc are all exempt of VAT and Inputs are recharged gross.
  • RyanMIP
    RyanMIP Registered Posts: 50
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    Interesting. The reason that I asked was that there is no concept in VAT of an "opted property", which implies that an option exercised by one person binds another - that simply isn't true.

    Every person with a legal interest in a property (be that freehold or leasehold) can, broadly, exercise their own option regardless of whether anyone else has opted in respect of the same property.

    Hence, if the superior landlord has opted their interest, they will be charging VAT to their tenant. To the extent that their tenant uses the property for taxable supplies, they may recover that VAT (regardless of whether they have also opted).

    If the superior landlord has not opted, they will not be charging VAT hence it is impossible for their immediate tenant to recover anything.

    It is, contrary to popular belief, possible to opt in respect of a residential property. The option has no effect, but can be made nonetheless.
  • JanetP
    JanetP Registered Posts: 7
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    I have now found the answer to the question. The Landlord is deemed a Local Authority (which was not obvious i.e not a council). This entitles him to charge VAT and therefore the correct VAT invoice has to be raised. The VAT status of the property is irrelevant in this case.
    I want to thank everyone for their comments which have all been really helpful.

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