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Hotel apartment

14 April 2015
Issue: 4496 / Categories: Forum & Feedback , input tax , VAT

VAT charge on rent from a hotel apartment and recovery on expenses

In 2008 our clients purchased a hotel apartment without a mortgage. At the time they were already registered for VAT as a self-employed partnership. The developer charged VAT on the hotel apartment which our clients reclaimed and then accounted for on the rental income received.

The clients also have a couple of commercial properties that they have rented out but VAT has never been charged on this income. I am not sure whether the treatment to date has been correct.

Both the apartment and commercial properties are owned personally in their joint names. The partnership trade finished some years ago but the VAT registration was kept to account for VAT on the hotel apartment.

The gross rent on the apartment is £46 000 a year with net income of about £18 000 after expenses. At the time of purchase the clients were advised to purchase...

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