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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a non UK resident with properties I let in the UK. I

Customer Question

I am a non UK resident with properties I let in the UK. I file a yearly return which my previous accountants for many years did not charge me VAT for the preparation and submission. Four years ago I changed accountants and they continued to invoice me without charging VAT. However the practice manager at the firm now states this is a mistake and VAT should be charged unless goods are 'physically being exported'. Who is right ?Additionally VAT was charged by the estate agent and solicitor who acted in procuring a lease extension and subsequent sale of one of the properties? Is that correct?
Submitted: 9 months ago.
Category: Tax
Expert:  TonyTax replied 9 months ago.

Hi.

Take a look here.

The supply of services around land and property is deemed to be where the land or property is. As the properties are in the UK, the letting services are provided from the UK and such services are, therefore, subject to VAT unless the letting agent isn't VAT registered. See under "Land and property services" for confirmation.

The letting of property is not treated as a business in the UK. It is treated as investment income. Therefore, the accountancy service is deemed to be supplied in the UK if it is provided to a non-business customer. See under "The general rule and the place of belonging". The accountancy fees are subject to VAT.

I hope this helps but let me know if you have any further questions.

TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15835
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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Customer: replied 9 months ago.
Hello Thank you for your reply. You refer to the fact that VAT is chargeable by VAT registered firms if it is to non business customers. My self employment , with its address given to HMRC as being in Brazil had two parts, the property lettings side and the property development side.
My previous accountants confirmed VAT was not chargeable on their invoices for accounting services and filing the return to HMRC once I moved to Brazil and became a Brazilian resident. At that point, they stopped adding VAT . My present accountants agreed with this until recently but now say this was wrong and VAT should have been charged. Please confirm if you still are of the view that VAT is chargeable Many thanks. Kind regards Patrick
Expert:  TonyTax replied 9 months ago.

The accountancy fee for your business should not have VAT added if the business is based in Brazil. The accountancy fee for your property letting should have VAT added.

Customer: replied 9 months ago.
The property letting and the property development is one and the same , under my self employment. They have never been treated separately. in that one tax return is filed to declare the letting income and development profit or loss. The letting income is derived in the UK and UK tax paid on that income, and my self employment address is registered with HMRC in Brazil . Does that clarify better my position?
Expert:  TonyTax replied 9 months ago.

If the rental income is disclosed in the rental pages of the tax return, then it is investment income and the fee should have VAT added. If the rental income is only a small part of the deveopment business and is disclosed in the self-employment pages, then one could argue that VAT should not be added to the fee. There is a fine line between being a property developer and a property investor. If most of the income is derived from letting property, I woulld be inclined to separate the two parts of the "business".

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