Company A owns a property. It rents the property out for residential use to a private individual. Rental income earned is £100,000 per annum. Does the company A need to register for Vat. If so does it need to charge Vat.
Now Company A additionally provides some project management services. Income from fees invoice is £50,000 per annum.
Does company A need to reigister for VAT?
If so does it now need to charge Vat on rental
Company A additionally purchases items for clients. Disbursements are repaid to company A. If the sum of disbursements and project management income is more than &85000 does company a need to register for vat?
Firstly you must register for VAT with HM Revenue and Customs (HMRC) if your business’ VAT TAXABLE turnover is more than £85,000.
Residential lettings are exempt from VAT, so NOT included in the taxable turnover. Genuine disbursements are outside the scope of VAT hence also not in the taxable turnover number. Hence the only number that matters is the £50k which is less than £85k hence no obligation to register.
However you may want to register voluntarily if the customers are in business, so that you recover input tax subject to partial exemption rules. Note expenses recharged to customers are not disbursements, and so count towards taxable turnover.