Readers’ forum: When does using space become rent for VAT purposes?

VAT and rental income

One of my clients is VAT registered and owns an art studio. He trades as an artist but also rents out space in the studio to other self-employed artists.

He has always treated the rental income as being subject to VAT even though he has never opted to tax the studio.

In some cases the artists have their own room and their own lock and key so that they can have total privacy to do their painting and keep the work safe. In other cases the artist will just come into the building and use space that is available.

Is my client accounting for VAT correctly? Presumably he could opt to tax the building to remove any doubt about the VAT position and that would also avoid a partial exemption. Does it make any difference that there is no separate supply of electricity...