VIT13440 | VAT Input Tax basics: leases to named individuals

Landlords often grant leases to a single named individual when the tenant is a partnership or a limited company. This is mainly because it is easier for the landlord to take effective debt recovery action if the rent is not paid.

A business is entitled to treat the tax as input tax provided that:

• the individual is not VAT registered in their own right;

• the individual gives the rent invoice to the business for payment;

• the business shows the expenditure in full in its accounts; and

• the whole of the premises is used by the business for the purposes of its business.

When this happens the individual is involved in a purely nominal way. They are not engaged in any separate business activity of their own.