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A reminder
that on 1 January 2010 VAT will
return to the old rate of 17.5%.
Landlords, who are charging VAT on
rents for their commercial leases
where the period of supply spans the
change over will be able to select
either to charge VAT at the rate of
17.5% or at 15% as the tax point
date in that case will be the date
of the landlords invoice to the
tenant. If the landlord decides to
charge the rate of 17.5% he will
have to apportion the value of the
supply between the period prior to 1
January 2010 at the old rate of 15%
and the period 1 January 2010
onwards at the new rate of 17.5%.
If the landlord receives rent in
advance from the tenant prior to
issuing his VAT invoice and that
payment is received before 1 January
2010 then VAT will be at the rate of
15%. The tax point date in this case
is the date the landlord.
For those tenants who are not
registered for VAT, but are having
to pay VAT on rents, they should
consider whether or not it would be
to their advantage to pay the rent
in advance for the period which
spans the changeover date if that
payment is paid in advance of the
landlord’s invoice. Tenants
considering this course of action
however should bear in mind that
HMRC are introducing
anti-forestalling provisions which
will create an additional 2.5%
charge where HMRC consider that the
supply is being paid far before the
changeover date outside normal
trading patterns in order to obtain
the benefit of the reduced rate.
Where rent is payable in arrears and
spans the changeover date, the
landlord will have the same option
to apportion the rent at the
different rates over the period of
supply or charge VAT at the rate
applicable at the tax point date
which in that case will be 17.5%.
If you have any queries on this or
any other matters relating to
landlord and tenant issues contact
Barry Challender on 01254
297912. |
Copyright 2006 - 2010
Taylors Solicitors
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