Can a construction company charge a letting company for works with the same directors?

NatsBry Registered Posts: 1
There are two limited companies e.g: construction Ltd and letting Ltd.

The letting company is letting out residential property so is exempt from VAT and only has a few admin expenses and the mortgage interest and cannot reclaim any vat on these and will be charging rents each month.

The construction company are doing rip outs on houses and rebuilding etc and will purchase lots of raw materials and want to claim the vat back on everything they buy. Then the construction company will invoice the letting company for any works they do on those houses and invoice for works on other projects. To begin with they will not be over the VAT threshold but want to voluntary apply as they expect to go over the limit in the next year, would this be ok? As will be the majority repayments from hmrc to start with.

I’ve spoke to HMRC on this but just trying to get a few other accountants opinions if possible.

Thanks :)


  • douglasstroud
    douglasstroud Registered Posts: 295 Dedicated contributor 🦉
    Shouldn’t be a problem, although the construction Company will still need to charge VAT to the letting Company for the labour & materials on the work carried out.
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