VAT on rent

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gilboy

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I pay 13,500 a year on rent for a retail premise. I am getting hit very bad for VAT lately. I remember hearing some time ago, even if you did not exceed the 37,000 income you could still register for VAT. Hence, wondering if my landlord could register for VAT.

I have a good relationship with my landlord. First of all, does he have to register for VAT in order for me to offset the VAT which I pay on my rent(13,500 would be inclusive of VAT) against by VAT liability.

Secondly, if he does have to register for VAT does that mean that he will then have to make VAT returns himself
 
Are you sure your Rent includes VAT ?? Most private landlords choose not to register for VAT. Yes if he does register for VAT of course he will have to do returns every two months. If you are not been invoiced for the rent and there is no VAT on the Invoice, I doubt if the 13,500 includes VAT.
 
You can register for VAT though if you earn less than 37k. I am just wondering if you do register, are you liable to make returns
 
gilboy said:
You can register for VAT though if you earn less than 37k. I am just wondering if you do register, are you liable to make returns
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Yes but what's the point if you haven't reached the ceiling and don't charge it on invoices?

In your example if your landlord registered, he would have to charge you 13.5K + VAT rent just to maintain the status quo for himself (assuming you ignore his extra book-keeping costs). It certainly doesn't help him - how do you think it helps you?
 
Thanks mercman

OK - lets assume in this scenario the annual rent is 13,500.

If my landlord registers for VAT, I can offset 21% of 13,500 against my VAT bill.

At the end of the year, my landlord will not have exceeded the VAT threshold of 37k. Will he have a VAT liability? I understand he will have to make VAT returns but I just want to determine will he have any VAT liability at the end of the year

Thanks
 
Vat on rent on leases is a very technical and complex area.

You need to consult either a solicitor or a tax advisor.

Even solicitors struggle with the complexities involved.
 
elgransenor said:
Even solicitors struggle with the complexities involved.
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as do accountants and Revenue , believe me. :)

The OP seems to think that they are being "hit for VAT" on the rent even though they also think the landlord is not registered for VAT. The implication in the original post is also that the OP is themselves presently registered for VAT. ( is this correct ? )

If so, then as mathepac said, if the landlord registers for VAT then that would be ON TOP OF the existing rent. That would not ease things for the OP in any way. They pay the landlord more and claim an input credit for the VAT so back to where they started.

VAT on property transactions took a major change in 2008. Appropriate professional advice is always advised in these areas.
 
Just wanted to provide some clarification to my original post.
I am registered for VAT. My landlord is not registered for VAT.

Currently our VAT build is choking the business. What I am trying to determine, if my landlord registered for VAT and we agreed that the annual rent I am paying(15k) is inclusive of VAT going forward:

(1) I can offset this against my VAT bill, right?

(2) Will it affect my landlord, i.e. even though he registers for VAT, the annual VAT that he would collect on the rent from me would be below the VAT threshold. Or is it the case, that if you register for VAT whilst earning less than the threshold, you still pay VAT on your earnings, e.g. 21% of 15k. I was thinking he would have to make his VAT returns during the year and then at the end of the year look for a rebate of the VAT payments he made because he is under the threshold.

Thanks
 
gilboy said:
Just wanted to provide some clarification to my original post.
I am registered for VAT. My landlord is not registered for VAT.

Currently our VAT build is choking the business. What I am trying to determine, if my landlord registered for VAT and we agreed that the annual rent I am paying(15k) is inclusive of VAT going forward:

Will it affect my landlord, i.e. even though he registers for VAT,
Thanks
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Is your landlord registered for VAT or not ?? There seems t be a misunderstanding. If he is, then it would be the rent plus VAT, not inclusive of VAT. Are you been invoiced for the rent plus VAT with a VAT number been advised to you.
 
Landlord is not currently registered for VAT. Hence, I am currently paying no VAT on rent.

I have informed the landlord the business is currently struggling. He wants to assist in whatever way as the chances of him getting new tenants for premises is very low.

Hence, I am trying to determine, where he to register for VAT - the 15k rent would change to 11850 + 3150 VAT. This would mean I could offset 3150 a year against my VAT bill.

At the end of the year, since his income on the rental premises is less than 35K, would the landlord get a rebate of the VAT he collected from me,i.e. a rebate of 3150

Thanks
 
No this is what would be called creative Accounting. In Simplicity, it VAT is charged on Outputs it must be paid to the Revenue, less the inputs in relation to the trade which is VAT registered. The only way to assist your dilemma is for the landlord to lower your rent or move to a cheaper premises.
 
Why on earth should the landlord register for VAT and keep the gross total the same, he is going to lose out. His rent would then fall !!!. If he registered he would charge + VAT to stay the same. He would not get a rebate, once registered thats it.
 
if I was your landlord and I was charging you 15k for rent and you wanted to get vat on the rent then I would charge you 18225 instead. No landlord is going to take a 21.5% hit for you, unless their family perhaps
 
Right, so if landlord was to register for VAT at the end of the year he cannot look for a VAT rebate because he is under the threshold. Thanks, this is what I was trying to confirm.

As rgds all the posts about the landlord been crazy to reduce his earnings by 21% - from my experience approaching landlord early and telling them business is in trouble you will find they can be quite flexible.

In my area, I have noted premises for rent well in excess of 12 months. Landlord would much prefer to have people in his premises at a lower rent than having it empty.
 
gilboy said:
As rgds all the posts about the landlord been crazy to reduce his earnings by 21% - from my experience approaching landlord early and telling them business is in trouble you will find they can be quite flexible.

In my area, I have noted premises for rent well in excess of 12 months. Landlord would much prefer to have people in his premises at a lower rent than having it empty.
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He might reduce it by 21% to keep a tenant, fair enough, lots are reducing rents to keep tenants. But going through the VAT route is not the way to do it.
 
Graham_07 said:
He might reduce it by 21% to keep a tenant, fair enough, lots are reducing rents to keep tenants.
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Some do and some don't. As a landlord, I wouldn't even consider it. Call me tight but I'm not a charity
 
Some do and some don't. As a landlord, I wouldn't even consider it. Call me tight but I'm not a charity
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Well I let out a house in Dublin the lease of which is up in April. Same tenants in it for the last 2 years and have been very perfect tenants. I have noted rents reducing in Dublin so if I have an opportunity to keep the same tenants whilst reducing the rent I will definitely do so.

Ship is floating while there is some income from the house. Coupled with this, there is a huge amount to be said for having tenants who look after the place, pay rent promptly etc.
 
gilboy said:
so if I have an opportunity to keep the same tenants whilst reducing the rent I will definitely do so.

there is a huge amount to be said for having tenants who look after the place, pay rent promptly etc.
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Definitely agree. Better have 80% of previous rent than none. What is it said about half a loaf better than no bread . Too many vacant residential lettings around our neck of the woods.
 
Residential leases are completely different than Commercial leases. If its a full repairing lease with a PG you're not comparing like for like.
 
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