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News

    VAT on Service Charges?

    Date issued: 12th October

    A case at the European Courts of Justice may have an effect on the charging of VAT on some service charges. A good summary of the case can be found here

    The jist of what is being said seems to be that if an element of the service charge can be 'opted in' or 'opted out' then it no longer becomes an integral part of the 'rent package' for VAT purposes, and VAT may become payable on that element. This has yet to be interpreted by HMRC for the UK but some lawyers are encouraging Registered Providers to consider what the impact may be for them.

    This seems similar to the treatment of garages and telecare services, where, if there is an element of choice in the charge it will be VATable and where the provision is integral with the letting of the property there is no VAT payable.