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Where Taxpayers and Advisers Meet

Free services provided to landlord

Joined:Wed Aug 08, 2018 11:06 pm
Free services provided to landlord

Postby AngryVATman » Sun Sep 12, 2021 1:04 pm

If a business pays it's landlord a market value rent for commercial property (not opted to tax), but also provides the landlord with regular free professional services (which would normally be standard rated), can the services be treated as outside the scope of VAT?

Or would HMRC argue that the services are in effect an additional non-cash rent payment as seek VAT on the value of the services provided? The marginal cost of the services is nil - the cost is absorbed into fixed staff costs.

As I understand, the provision of free professional services is not documented in the lease.

Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Free services provided to landlord

Postby pawncob » Mon Sep 13, 2021 9:10 am

If it's a market value rent then I'd say that any professional services provided would be a personal gift to the landlord and not subject to VAT (or tax).
With a pinch of salt take what I say, but don't exceed your RDA

Joined:Wed Aug 06, 2008 3:09 pm

Re: Free services provided to landlord

Postby les35 » Mon Sep 13, 2021 1:48 pm

I think this describes a 'contra' arrangement, where the professional services are part of the consideration for supply of the rent.
It might be prudent to have a simple agreement between the parties, indicating that the rent is being charged at market value, and no account is take of the free supply of professional services. You could add a Schedule to that effect in the lease.

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