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TaxRobin
TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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Can I rent out my business premises to someone else (self

Resolved Question:

Can I rent out my business premises to someone else (self employed)? my t/o is nearly at the vat registration limit for the year but ive worked out ill be worse off if i register, in effect ill be working the rest of the year for no extra money. So if i rent out the biz premises and stop trading under my own account, have the renter set up his own ac with suppliers etc is this legal? Or would revenue consider it to be the same biz and therefore liable to vat? Thanks
Submitted: 11 months ago.
Category: Tax
Expert:  TaxRobin replied 11 months ago.

Hello

There is the chance that HMRC would see this as a joint business activity especially as you appear to still be active yourself in the business (ill be working the rest of the year for no extra money).

Your involvement in the business and the same activity in the same location with the same vendors or suppliers is too closely related.

Customer: replied 11 months ago.
Hi Robin, I was looking for answer specific to irish revenue.
Also, i would not be working there any more myself if i rented it out, what i meant was if i have to pay vat on the years t/o ill have to work the rest of the season (its seasonal biz) and the profits will all go on tax
Customer: replied 11 months ago.
Its a fish and chip trailer
Expert:  TaxRobin replied 11 months ago.

For Ireland you would treat the rent like any other business income. I do not see how you can use this method to avoid VAT.

Customer: replied 11 months ago.
Ok, so if i had 2 trailers and worked one myself and rented the other out its still one business for tax purposes? Im thinking of renting out one of them next year. Or would i have to form a limited co, sell that premises to the co and split them up that way? One of the trailers makes 1/3 more t/o than the other
Expert:  TaxRobin replied 11 months ago.

You could rent out the other but it is income to the business. If you had another entity that held the 2nd trailer and it was not part of your activity then that would be separate.

You would need to make sure the person you lease to is not already business related to you. VAT avoidance is is not over looked. Back in 2008 a case was ruled on between to partners and them trying to use a lease arrangement to avoid tax. They were in housing but the main point was the court saw their main purpose was to avoid VAT.

Customer: replied 11 months ago.
Also if i decide to continue trading this year will all the vat on t/o made since start of the year fall due for payment at the next return i.e september?
Expert:  TaxRobin replied 11 months ago.

The VAT is on after threshold amounts.

If you register for VAT on the 1st of September, and operate returns on a bi monthly process (every two months), your first VAT3 will be for September/October, and will be due on the 19th of November.

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Customer: replied 11 months ago.
i would only pay vat on the turnover thats OVER 75k, not on the turnover up to the threshold. So for eg. If the business goes on to make another 20k over the threshold (total turnover 95k) id only pay vat on that 20k? Thanks

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