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Where Taxpayers and Advisers Meet

VAT Query

Posts: 6
Joined: Wed Apr 03, 2019 9:59 am

VAT Query

Postby Smithy01 » Tue Apr 16, 2019 12:53 am

Hi Everyone,
Is VAT payable on deposits ie., a deposit taken for leasing of business premises?

Posts: 2781
Joined: Wed Aug 06, 2008 4:01 pm

Re: VAT Query

Postby robbob » Tue Apr 16, 2019 8:50 am

Hello Smithy01

There is two different kind of deposits - one is a deposit paid on account / in advance for the provision of vatable services or goods in which case there will be input vat to reclaim with regard to that expense - or output vat to account for.

The other deposit is a payment which is not a payment for provision of vatable services or goods - eg security deposit which in theory will be refunded in full as long as the terms of the agreement are met -in this circumstance there is is no vat to reclaim. If the leasing deposit is not actually an upfront payment of rent then no vat reclaim will be allowed and no output vat due if you receive money.

Note often there is no vat charged on rent anyway - so if rent/leasing payments are not subject to vat anyway then any deposit on account for that rent would follow the same rules and there would be no vat due.

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