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Sam, Accountant
Category: Tax
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Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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we are having a vat inspection at our pub. We have long term

Customer Question

we are having a vat inspection at our pub. We have long term tennants in the domestic quaters do we have to pay VAT on their rent?
Submitted: 4 years ago.
Category: Tax
Expert:  Sam replied 4 years ago.

Thanks for your question

Usually residential lettings are not subject to VAT unless the building has been opting in to tax (charge VAT)
If the building has not been opted in, then the rents are exempt from VAT, but you also need to make sure that any VAT you have reclaimed has been adjusted to claim the VATable part of the business only, as you will have a partial exemption for both the income you make, but also the expenses you incur, so you may find that some adjustment might be needed by the inspection.
Just be honest how you have taken this forward and completed your VAT returns, and let HMRC make those adjustents for you.