VAT and CT on shared office query

[Rafd]

I'm contracting via my Ltd co and I need to rent an office space. I've found one locally that is big enough for several desks so my idea is to rent the whole room then rent the remaining desks out individually to other people to help cover the office costs. I've run this past the property manager and it is ok with them. My question is, how do I deal with this in my accounts (FreeAgent) specifically with regards to charging VAT to the other occupants and paying HMRC correctly.

If it makes any difference, the sub-tennants are not VAT registered, they are self employed and would be wanting to expense the office costs.

[DeludedKitten]

You pay the invoices that you are due to pay the property manager.

You issue an invoice for the service to the other people. You include VAT on that invoice.

They pay the invoice.

[Rafd]

Ok pretty straight forward thanks! Any clues as to how to run these invoices in FreeAgent - it seems to be fixed on the idea that I am invoicing for work/projects not office space.

[northernladuk]

Ok pretty straight forward thanks! Any clues as to how to run these invoices in FreeAgent - it seems to be fixed on the idea that I am invoicing for work/projects not office space.

Erm, I don't want to be rude but are you sure you want to be getting in to the complexities of renting office space when you can't work out how to invoice in a class leading bookkeeping tool that is set up to do this for you?

[Lance]

I'm contracting via my Ltd co and I need to rent an office space. I've found one locally that is big enough for several desks so my idea is to rent the whole room then rent the remaining desks out individually to other people to help cover the office costs. I've run this past the property manager and it is ok with them. My question is, how do I deal with this in my accounts (FreeAgent) specifically with regards to charging VAT to the other occupants and paying HMRC correctly.

If it makes any difference, the sub-tennants are not VAT registered, they are self employed and would be wanting to expense the office costs.

if the sub-tenants (just the two Ns) aren't VAT registered you could take cash from them, and not charge them VAT. Don't provide them an invoice (obviously). They save the VAT which may well be as much of a saving for them as expensing it.
Just a thought.

Caveat : It's not legal.

They could then choose to expense it anyway and you'd have to hope they don't get investigated.

I'm not condoning the behaviour but it's very common practise when small VAT registered companies deal with non-VAT registered people/companies.

[TheCyclingProgrammer]

Ok pretty straight forward thanks! Any clues as to how to run these invoices in FreeAgent - it seems to be fixed on the idea that I am invoicing for work/projects not office space.

You can create an invoice in FreeAgent for anything you like (and assign a sales category if you want).

[TheCyclingProgrammer]

I wouldn't worry about having to charge VAT to sub-tenants who aren't VAT registered. Having to pay for VAT on their costs is part and parcel of running a non-VAT registered business. All that matters is a) can you charge enough to make it worthwhile and b) can they afford it?

Have you checked that the lease would actually be standard rated for VAT?

[Rafd]

Thanks for the help. Sounds like a fair risk doing it off the books as you mentioned. Even assuming the sub tenants (see what I did there?) are ok with not expensing it, I may then end up in a position where I have to justify the entire cost of the office for my own use to HMRC.

[northernladuk]

Thanks for the help. Sounds like a fair risk doing it off the books as you mentioned. Even assuming the sub tenants (see what I did there?) are ok with not expensing it, I may then end up in a position where I have to justify the entire cost of the office for my own use to HMRC.

And what about insurances, H&S, contracts etc?

Impacts on your contract if they trash the place, sue you etc...

[TheCyclingProgrammer]

Thanks for the help. Sounds like a fair risk doing it off the books as you mentioned. Even assuming the sub tenants (see what I did there?) are ok with not expensing it, I may then end up in a position where I have to justify the entire cost of the office for my own use to HMRC.

I'm not sure committing VAT fraud is a particularly sensible idea, but whatever floats your boat.