Naiive VAT question

[kendalcottages]

Sorry, this is probably a very naiive question but I'm getting conflicting information on it, so perhaps someone could clarify...

Is rent from a holiday let VATable?

[Windy]

There's no such THING as a naive VAT question!

Here is what I have gleaned (IANAA)

1. Income from holiday lets is treated the same as any other income as far as VAT is concerned.

2. If it is your only business then you do not have to register for VAT until yout turnover reaches the registration threshold (currently £68,000)

3. If you run other businesses too you must be very careful about keeing resources used separate if you don't want the VAT man to see them as one entity. I think you'll get away with sharing a computer, but if you were to use a shared bank account and or credit card terminal for example things might start to get tricky.

4. If you do register for VAT you might benefit from the flat rate scheme where instead of claiming VAT on costs and paying it on sales you simply pay a reduced rate (About 8% from memory) on sales. This is because many of your smaller suppliers like cleaners may not be VAT registered themselves.

5. Remember that if you DO exceed 68k by even 1p you will be liable for about 5.5k of VAT straight away. Put another way any income you make betwen 68k and about 73k is Gordon's along with 8% of anything else. It's OK though - he's going to buy some more helicopters with it.

Don't believe a word of the above without validating it with an acountant!

[kendalcottages]

1. Income from holiday lets is treated the same as any other income as far as VAT is concerned.

Thank you for this. I need to speak to my accountant again, I think, as he was implying this was not the case.

[Windy]

He could be right and if he is do please come back here and tell me!!!

I honestly can't think of any reason why holiday lets would be exempt though.

The information on this page would appear to support my view

http://customs.hmrc.gov.uk/channelsPort ... P178_14281

In my experience the problem with accountants is that you have to research all the rules and tell them the details so that they can then charge you for their professional advice

[kendalcottages]

Thanks again - I have sent an email asking for clarification (and have included the link that you kindly supplied).

I'll let you know what response I get.

[Margaret]

I would phone the Inland Revenue. They are very helpful. I would never ask (and pay!) an accountant for basic tax information you can get for free.

[Windy]

Be aware though that if you want a definitive anwer you should request it in writing from the VAT office.

The droids at the call centres are NOT VAT technical experts, so err on the side of caution when accepting their(and our) responses.

[Mountain Goat]

Aren't VAT/Customs a totally separate outfit from the IR?

MG

[Windy]

I'm not sure MG

The whole operation is called Revenue & Customs (HMRC) so I guess not.

They all gouge money out of you at every opportunity anyway.

[Marks]

You need to register for VAT once your turnover reaches the current threshold of £68K in a rolling 12 month period. For example, at the begining of December 2009, if your turnover in the period 01/12/08 to 30/11/09 is under £68K you continue as you are. At the beginning of January 2010 you calculate your turnover for the period 01/01/09 to 31/12/09 and so on each month. Once you hit the threshold in the previous 12 months period you register for VAT at the end of the following month. So, if you reach the VAT threshold on 02/02/10 you register on 31/03/10. Don't work to your own financial year dates or the 5 April HMRC dates, it's always the last 12 months that applies.

[Margaret]

I think VAT is often not seen to be relevant to holiday lettings because very few individual properties or even small groups would reach that level of turnover. If you have a complex of cottages or whatever and are looking at turnover at that sort of level (or even somewhat less), you will most likely be set up as a business and therefore VAT aware anyway. You can always register voluntarily if you turnover is less than 68k but you think you are could benefit from VAT rebates - I have a UK based publishing business which is almost all export so we very rarely charge VAT but have plenty to claim back - I registered for VAT from day 1, even with a turnover of under 10k, and have always received a VAT rebate, never paid any. It depends on your type of business.

[Windy]

Strange how we are apparently not a trade but we still qualify to pay VAT isn't it

Alistair Darling really want to have his cake and eat it doesn't he.

[e-richard]

Aren't VAT/Customs a totally separate outfit from the IR?

http://www.hmrc.gov.uk/menus/aboutmenu.htm

"HM Revenue & Customs (HMRC) was formed on the 18 April 2005, following the merger of Inland Revenue and HM Customs and Excise Department"

[apexblue]

OH is registered for VAT on his other business so we put any holiday rental VAT against that (as advised by accountant).

[kendalcottages]

Thank you, everyone.

My accountant has called me this morning confirming that there is VAT in rent afterall, and he and a partner are very grateful for me pointing it out as they hadn't realised, and apparently, come April, it will effect a number of their farming clients that have holiday cottages.