My friend rents a room at an agreed price of 100pound a week, anyway at the end of the month she received her invoice for 400pound, plus 100pound to pay for VAT? I've never heard of this before, I never paid this myself when I previously rented, is this allowed surely she shouldn't have to pay vat when she is not earning enough to pay any vat herself plus this wasnt discused previously,herself,
VAT on renting a room
- Thread starter glitzybiz
- Start date
Help Support SalonGeek:
Hi,
I have been advised by my accountant that:
Many salons charge a fee for using salon space. HM Revenue & Customs (HMRC) policy, backed up by many court decisions, is that this is subject to VAT at the standard rate.
Most salon owners get this right, but a significant minority still argue this is an exempt supply.
However, this measure does not come into effect until on or after 1 October 2012.
But my accountant thinks that the rental of chairs or rooms in salons should always have been taxable - i.e. should always have VAT on the invoice if the salon owner is VAT registered, so it's probably right.
Helena
I have been advised by my accountant that:
This measure was announced at Budget 2012 and a consultation document entitled VAT: Addressing Borderline Anomalies published together with draft legislation. Many salons charge a fee for using salon space. HM Revenue & Customs (HMRC) policy, backed up by many court decisions, is that this is subject to VAT at the standard rate.
Most salon owners get this right, but a significant minority still argue this is an exempt supply.
This is a single taxable supply of facilities AND should have VAT on the invoice (but only if the Salon owner is VAT registered!)However, this measure does not come into effect until on or after 1 October 2012.
But my accountant thinks that the rental of chairs or rooms in salons should always have been taxable - i.e. should always have VAT on the invoice if the salon owner is VAT registered, so it's probably right.
Helena
j8yba
Well-Known Member
If the salon is VAT registered, every invoice they produce should have VAT applied to it.
There are some exclusions but it's a mine field if you start going into the intracate details. but I doubt rental of space is Vat exempt.
They salon should have known better and quoted you with the figure which included the Vat.
It's a bit sly that as they'll have known full well that there'll have been a further 20% on top of their quoted price.
They don't make any money from VAT though, as that 20% goes straight to the Vat man.
If they were to quote you £400 inc Vat they'd actually only be taking £333(ish) in rent, the other £67 going to Vat.
PS £400 plus vat is £480.
There are some exclusions but it's a mine field if you start going into the intracate details. but I doubt rental of space is Vat exempt.
They salon should have known better and quoted you with the figure which included the Vat.
It's a bit sly that as they'll have known full well that there'll have been a further 20% on top of their quoted price.
They don't make any money from VAT though, as that 20% goes straight to the Vat man.
If they were to quote you £400 inc Vat they'd actually only be taking £333(ish) in rent, the other £67 going to Vat.
PS £400 plus vat is £480.
Last edited:
Thankyou for the replies, yes I thought the same the adding up is wrong, and she hadn't mentioned any vat on top, just gave her the envelope at the end of the month without saying a word and then when she got home saw the extra cash to pay, I think maybe she should ask for a proper headed invoice with vat number on etc, as this was just written on a blank piece of paper, I'd be surprised if the salon owner is even vat registered? As she hasn't been open a year yet?!? Just seems a bit suspicious x
Divine h & b
Well-Known Member
I would question it if there is no vat registration number you don't have to be vat registered until takings are over £60 something grand may even be more now plus as you say her calculations if vat are wrong. Sounds to me as if she's just trying to get extra cash!
kimi1101
Well-Known Member
Simply ask for vat registration number. If she is vat registered, you will need to pay her vat. If she can't supply you with proof that she is registered, then I would argue she is not registered.
j8yba
Well-Known Member
Anyone can voluntarily register to become Vat registered, theres no time constraints or minimum turnover.
Like someone else said, you MUST register for VAT if your turnover is over £60k pa.
But yes, all paperwork, ie invoices MUST have the Vat number on.
If they are claiming for VAT without being registered it is highly ILLEGAL and if found guilty will face a serious criminal conviction and probably jail time.
The inland revenue take VAT fraud extremely seriously!
Like someone else said, you MUST register for VAT if your turnover is over £60k pa.
But yes, all paperwork, ie invoices MUST have the Vat number on.
If they are claiming for VAT without being registered it is highly ILLEGAL and if found guilty will face a serious criminal conviction and probably jail time.
The inland revenue take VAT fraud extremely seriously!
sophiegees
Well-Known Member
VAT threshold is £73000
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Divine h & b
Well-Known Member
Great last time I check was £64000!
