Hi, Can anybody please advise HMRC should treat VAT on income from rental properties held jointly by myself and my wife who are also a legal partnership for my wifes hairdressing business. The hairdressing business is currently being subjected to an inspection and whilst the inspector has advised my wife that he is happy with the books he has inspected to date he now wants to review the VAT elements of the partnership and advised her today that any properties owned in the names of the partnership will be subject to VAT on the rental income. I have a separate PAYE full time job and take no profit from the hair salon partnership so am effectively a sleeping partner. The partnership in place to run the hair salon is in the names of myself and my wife and we also have six rental properties owned jointly by myself and my wife which are run completely separate from anything to do with the hair salon. Are there any rules on when the rental properties fall within the scope of a partnership?