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Sam, Accountant
Category: Tax
Satisfied Customers: 14157
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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I am a small business and I pay rent of £600.00 a month

Customer Question

I am a small business and I pay rent of £600.00 a month to a Landlords pension fund account which doesn't itself pay VAT.
My question is, should I pay the VAT on the £600.00 as I do not get any VAT receipts which I can use to make a claim back from HMRC?
Thank you in advance for your help
Submitted: 2 years ago.
Category: Tax
Expert:  Sam replied 2 years ago.
Hi Martin Thanks for your question Usually rent only attracts VAT when the property is opted into tax (by the owners) As your rents is paid into a Landlords Pension Fund - which I assume is attached to the owner of the premises then if VAT were due you would be provided with evidence - so you need to speak with the owners as to whether you are paying VAT or not just in case a charge is being made and you then need to request VAT receipts Thanks Sam
Customer: replied 2 years ago.
Hi Sam, thank you for your quick response.VAT is definitely charged on the Rent going to his Pension Account. As I mentioned we have never received a receipt or a VAT Receipt.Does this mean that legally I can mention to the landlord that as you dont pay VAT on a pension fund account then we are credit with him with the moneys already paid that according to our contract is inclusive of VAT.Also, future payments, can I make them at £480.00 (£600 inc VAT) without any recourse?I ask this as the landlords have been elusive as far as sending any type of receipt even though we have asked on several occasions.RegardsMartin
Customer: replied 2 years ago.
If possible I need a clear cut answer as the Landlord is taking us to court for 3 months rent arrears even though we have paid them over £11,000.00 inc VAT.
Expert:  Sam replied 2 years ago.
Hi Thanks for your responsive Then clearly he has an option to tax on the property so VAT is due but you should have been provided with a receipt each month detailing this payment and the VAT suffered. The fact that this payment gores into a pension fund has no bearing - its how the money due originates that determines whether VAT is due, so you need to ask for the outstanding receipts so you can claim back VAT (If you are VAT registered) Thanks Sam
Customer: replied 2 years ago.
Hi Sam,I have an email from the landlord which includes the following :"With regard to the VAT as you are aware it is our pension account which is not registered for VAT, however as a gesture of goodwill we will reduce the 20% from the total amount IF you pay the arrears of £2,400 before the 31st January 2016 AND all future payments are received on or before the due date."Does this affect the reply you gave me re whether VAT is actually chargeable? If it were surely they would not agree to take off the VAT as HMRC would be expecting the monies.NB: We are not in this unit anymore, we left it around 2 years ago, the outstanding rent arrears are due to the fact that we have never received a rent invoice from these landlords. These landlords took over the unit from a different management company who always sent a quarterly VAT receipt for the unit. The current landlords are not a management company they are just a business who were a few units down from us who bought the unit as a pension fund investment.If there is any other details you need please let me know. We are not trying to get out of the payment, but, we only want to pay the correct amount due.Martin
Expert:  Sam replied 2 years ago.
Hi Thanks for your response Yes as I advised - it would appear that the property you rent has been opted to tax - and its this you pay the VAT on - then the account in which the rents (plus VAT) are paid (which could be any old bank account - but happen to be a pension fund) are not charging the VAT. So the questions you need to ask - to satisfy yourself is1) So is the property you rent opted to tax and if YES20 Can you have VAT receipts detailing the rents paid and VAT charged If they then say the property is NOT opted to tax then they have in fact been charging your VAT illegally - and I would then advsie you alert HMRC VAT and take legal advise how to proceed (but I would keep paying the net rent that is due) Let me know if I can assist further But it would be appreciated if you would rate me for the level of service provided (or click accept) Thanks Sam