Waiving VAT exemption on short term lettings - Ltd Co

I know a limited company who are renting out a commercial property for three years. The property owner has chosen to waive their VAT exemption on short term lettings. However, due to not being correctly informed by their tax adviser, they let the tenant occupy the property for a couple of weeks and have not sent a letter to the Revenue Commissioners informing / requesting that they waive the exemption.

The property owner is now being informed that letting the property in this way is treated as a sale for VAT purposes - becuase they did not send the letter in relation to the VAT exemption before the tenant moved in. In other words the property owner is being informed that they are liable for VAT @ 13.5% on the market value of the property.

Personally I find it difficult to believe that a company who wanted to do everything above board would be penalised in this way, simply because they did not send a letter on time.

What should the property owner do?

Thanks!

Unfortunately, the VAT treatment is correct, the legislation is clear that you can not back date a waiver of VAT exemption, it is extremely important that the letter is submitted on time to the Revenue Commissioners.

He could appeal to the better nature( do they have those in Revenue ) of the Revenue person dealing with this matter but i would feel that Revenue have the legislation on their side.


In defence of the tax advisor, i'm one myself, are you sure the company gave all of the information to the advisor, i always put in a caveat that my advice is based on the information provided by the client.
if it transpires they didn't give me all the information then it is difficult to ensure that the correct advise is given.

katiealice said:

...In defence of the tax advisor, i'm one myself, are you sure the company gave all of the information to the advisor, i always put in a caveat that my advice is based on the information provided by the client.
if it transpires they didn't give me all the information then it is difficult to ensure that the correct advise is given.

Click to expand...

Thanks for the clarification Katie. It was a misunderstanding I suppose with the Tax adviser. The adviser did say that the company would waive their exemption, but did not specify how to do that. The company assumed it would simply a matter of including the VAT on the rent on their VAT returns.