SUB LETTING - CLAIMING VAT

[SHARPYWAN]

Hi,
I own a Ltd company operating in a large 20,000ft2 unit.
I am now splitting the unit and operating a 2nd ltd company in around 8,000ft2 of the 20,000ft2 unit.
I am subletting it from company A to company B.

There are a number of large value invoices in the set up of company B, mainly building costs.
However company B is in an industry where it can not be VAT registered.
So am i ok to have these invoices invoiced directly to company A who is vat registered so i can claim the vat back.
As the full lease of the 20,000ft2 is leased to company A, and B is just subletting from A.

Any help greatly appreciated
thanks

 

[DWS]

Hi,
I own a Ltd company operating in a large 20,000ft2 unit.
I am now splitting the unit and operating a 2nd ltd company in around 8,000ft2 of the 20,000ft2 unit.
I am subletting it from company A to company B.

There are a number of large value invoices in the set up of company B, mainly building costs.
However company B is in an industry where it can not be VAT registered.
So am i ok to have these invoices invoiced directly to company A who is vat registered so i can claim the vat back.
As the full lease of the 20,000ft2 is leased to company A, and B is just subletting from A.

Any help greatly appreciated
thanks

If the costs are incurred by Company B not sure how you can claim back the VAT through Company A

 

[SHARPYWAN]

If the costs are incurred by Company B not sure how you can claim back the VAT through Company A

well because it is Company A that is leasing the whole unit. then subletting part to company B. so spends for example to put new toilets and drainage in. it's a cost for the building. The unit couldn't be subletted without such a facility. so surely costs like this can be invoiced to company A?

 

[DWS]

well because it is Company A that is leasing the whole unit. then subletting part to company B. so spends for example to put new toilets and drainage in. it's a cost for the building. The unit couldn't be subletted without such a facility. so surely costs like this can be invoiced to company A?

If it’s for Company A business then yes no problem but if it is to enable the property to be rented then no as the rent will be exempt from VAT unless Company A has opted to tax the property.
You also need to consider partial exemption on the future VAT returns.

 

[UK Contractor Accountant]

VAT Option to tax the building by company A is crucial if you want claim vat back on the conversion works.via company A.

Option to tax will mean company A will then need to charge VAT on the rent invoice to company B which it is unable to claim back as unable to register for VAT.