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taxadvisor.uk
taxadvisor.uk, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 4996
Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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My business partner in China wants to set up a website in

Customer Question

My business partner in China wants to set up a website in China to let landlords to let their house/flat/room in the UK. The website will be hosted and run in China, the targeted clients would be people/students who are coming to the UK to work/study. The website is going to charge 30% of the gross rent of the properties.
The website will be set up and run by company in China.
My business partner's question is, is the UK Tax office going to check and charge for VAT to the company? Someone argues that because the rent is from houses let out in the UK. This company should pay VAT.
Submitted: 1 year ago.
Category: Tax
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your question..

Where is your company based and where would you account for your income?

Would you have an operation in the UK?

Many thanks

Customer: replied 1 year ago.
Hi the company is not mine. It is my friend's and based in China. The website and company would be operating in China. However, he will outsource workers in the UK to look after some of the properties.
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply..

Outsourcing means a cost to your organisation.

If the invoices for your fee (30% of gross rent) are going to be raised by the company in China and the money is going to the company there, then there is no VAT implication.

The company will not pay VAT for services undertaken by it in China.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.
Thank you for your answer. My friend was confused. Because one of the accountant in the UK said that, because the income is from the houses let in the UK. The UK Tax office has the right to check his company's income and charge for VAT.
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

Your friend's company is not letting properties but introducing potential tenants to potential landlords.

I will appreciate if you would kindly rate/accept the service I provided to ensure I get credited for it by Just Answer.

Customer: replied 1 year ago.
Sorry, maybe I did not make it clear in the beginning. The 30% charged is for both introduction fee and management fee. The company in China will source clients for the houses and also manage the properties for landlords. The landlord will assign a 2 years lease to the company to let out the property. The company will need to pay the basic rent to the landlord according to the lease. I am not a native English speaker and I hope that I make it clear this time.
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply..

Where are you managing the property from..

If you are providing the service from remote then there is no VAT.

If you were trading from a business address in the UK, then VAT applicable.

I hope this is helpful.

Expert:  taxadvisor.uk replied 1 year ago.

Hello there, just checking to see if you need further information or explanation on points covered.

Many thanks

taxadvisor.uk and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
Hi yes I am still confused. I was told by someone from the financial sector that because the rooms (products) are in the UK, so the company should still be liable for VAT in the UK.
Expert:  taxadvisor.uk replied 1 year ago.

Thank you for your reply.

First of all, you only have to register for VAT if your vatable sales exceed the threshold of £83,000.

You are providing a service to your customers from a remote location..

More information on VAT registration etc is covered here

https://www.gov.uk/vat-registration/calculate-turnover

Furthermore, as a general rule rent is exempt from VAT unless the landlord that opted to tax.

More information on this can be found here

http://www.qualitysolicitors.com/business/business-premises/faq/is-vat-charged-on-property-rental-payments

I hope this is helpful