Pub Accounts

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT member discussion
Good Morning all

I have been asked to look at the accounts for a friend who has taken up tenancy of a pub. Tenancy was taken up in October and nothing has been done with the books!

Basically, there will be three sources of income:
Wet Sales
B&B
Catering.

I believe it would be beneficial to itemise these into three separate accounts. Would this mean that essentially, it would be treated as three separate businesses? They are currently below the VAT threshold, however the landlord is trying to add VAT to his rent. I may be wrong but I thought that rent was VAT exempt. Can anyone confirm this.

Finally, if anyone has any helpful information on pub accounts it would be gratefully received! I am doing this as a favour to a friend ( I did promise myself no more favours to friends but there you go :? )

Thanks in advance for any info.
Siany

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pub Accounts

    There is only one business, so only one set of accounts needed. The way I show this is to seperate the sales and cost of sales into the three headings, then just subtract the overheads, which generally apply to all.

    Sales
    Wet
    B&B
    Catering
    Total sales

    Cost of sales
    Wet
    B&B
    Catering
    Total cost of sales

    GROSS PROFIT

    Expenses

    NET PROFIT

    I generally then do a seperate schedule within the accounts showing the gross profit and margin (with comparatives) for each source of income.

    Rent is generally exepmt. However, it sounds like there is an 'option to tax'. This is beneficial to landlords whose tenants are VAT registered, as they can recover VAT on their costs associated with the premises for which they have this 'option'.

    Once this option has been made, it is in force for a minimum of 20 years.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pub Accounts

    Hi twd

    Thanks for the info. The tenants are not VAT registered (for the moment). Therefore, does this mean that the landlord can not enforce VAT on the rent?

    cheers
    Siany
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pub Accounts

    The landlord appears to have "opted to tax" the building in which case he must charge the tenant the VAT.

    I would treat the accounts exactly as Tom has suggested too.

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pub Accounts

    Thanks Dean

    In that case, as the tennants are very near the VAT threshold, It would be beneficial for them to register for VAT in order to recover the costs?

    Thanks
    Sian
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pub Accounts

    There's other factors to take into account but yes it could be beneficial to register early.

    Regards

    Dean
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Pub Accounts

    All the pubs that I have ever dealt with have had VAT added to the rent (all owned by big breweries).

    Most pubs should rush to the VAT threshold quite quickly - its only c. £1,200 per week.

    Pub accounts can be a nightmare - beware of favours, they should be paying good money to someone for their books, payroll, VAT and tax :D

    Not one that I would do a favour!

    Claudia

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