Where you take a rent deposit from the tenant, and the lease is VATable, how much VAT are you taking from the tenant? The current rate of VAT is 15%, but it will go back up to 17.5% in 2010 – which may be the very moment when the deed needs to be used. Therefore, instead of asking for rent plus 15% VAT as a deposit, insist on rent plus 17.5% VAT. The landlord can do this, as the current payment of a rent deposit is not one which is made in respect of a VAT supply – it is a payment made in respect of possible future default.
Property PSL