From 1 November 2018, owners of properties on estates or sites that are obliged to pay service charges to a management company – for example, for the maintenance of common areas, gardens, or the employment of a site warden or caretaker – may be in for an unwelcome surprise.<\/p>\n
It would seem that HMRC have applied a concession in the past that allowed the management companies to treat service charges collected on behalf of a landlord as part of an exempt supply for VAT purposes – in other words, when the management company charged a resident, no VAT was added to the fee.<\/p>\n
From 1 November 2018, if the right circumstances apply, the management company will need to treat the supply of services as a standard rated supply for VAT purposes. As the current rate of VAT is 20%, residents affected may see an equivalent increase in their charges.<\/p>\n
However, if the management company for your property is obliged to charge you VAT, it will also be able to claim back VAT on expenses related to your service charge: this is VAT that in the past was a cost to the management company. It is estimated that a more likely service charge increase due to this change in VAT rules will be between 10% to 15%.<\/p>\n
Smaller management companies should not be affected by these changes.<\/p>\n
As always, unpicking the various “grey” areas of the VAT regulations will likely prove to be a headache for residents and the management companies affected. If you are reading this short article and have concerns, please call for more information.<\/p>\n","protected":false},"excerpt":{"rendered":"
From 1 November 2018, owners of properties on estates or sites that are obliged to pay service charges to a management company – for example, for the maintenance of common areas, gardens, or the employment of a site warden or caretaker – may be in for an unwelcome surprise. It would seem that HMRC have […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-433","post","type-post","status-publish","format-standard","hentry","category-uncategorised"],"_links":{"self":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/433","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/comments?post=433"}],"version-history":[{"count":0,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/posts\/433\/revisions"}],"wp:attachment":[{"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/media?parent=433"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/categories?post=433"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/duffyregan.co.uk\/index.php\/wp-json\/wp\/v2\/tags?post=433"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}