My client provides standard letting services inasmuch as she takes non-vatable rents from the public into a client account and then invoice her client for her service. She is soon to become VAT registered as she will go over the limit. However she wants to buy a property into the business and rent this out to the public. As she will soon be VAT registered will she have to charge VAT on these rents? She obviously doesn’t want to do this as it increases the cost for the tenant. Advice please? 

Arthur Weller replies:  

If the property is residential she cannot charge VAT on the rents she charges the tenant because this is an exempt supply. This is not a matter of choice (as in opting to tax a commercial property). Since this is an exempt supply, no input VAT can be recovered.