Q. My company bought retail premises 18 months ago and I am VAT registered. I now want to let the flat upstairs to a residential tenant. Do I need to charge him VAT?
A: No, you don’t need to charge him VAT because letting residential accommodation is an exempt supply. However, your business will be partially exempt going forward and so you will need to apportion your input VAT between the taxable and exempt parts accordingly, only claiming the amounts that relate to your taxable business. This will generally be easy, but there will be a need to apportion VAT in cases where costs relate to both parts, e.g. repairs to the roof. I suggest that you familiarise yourself with the rules set out in the government’s partial exemption VAT Notice 706 to ensure you are confident with your VAT reporting obligations.
About the Author
Martin Johnson
Partner
With expertise in advising family-owned companies on a range of tax, accountancy and business issues, Martin also has an in-depth knowledge of the automotive and property sectors. In addition, he provides advice on inheritance tax planning and financial management to owner-managed businesses.
Martin leads the firm in developing its expertise in the buy-to-let sector, advising both residential and commercial property owners on relevant tax and legislation issues.
A further element to Martin’s role is to build Torgersens’ relationships with banks, financial advisors and specialists in commercial and employment law to ensure that the firm’s clients have access to market-leading guidance.
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