VAT guide
VAT Treatment of Contractor Recharges: Technical Analysis
The disbursement conditions applied to five recharge structures, for accountants and tax advisers.
A technical companion to our agent guide, written for accountants and advisers who act for letting agents.
It tests five common contractor recharge structures against HMRC's eight disbursement conditions, using the principles from Rowe & Maw. Each gets a condition-by-condition table and a risk conclusion. It also covers:
- The usual counter-arguments, including "the supply is to the landlord", "the software allows it" and routing the margin through a connected company, with the disaggregation risk that brings
- Secondary payment mechanisms, and why the route of payment doesn't decide who is making the supply
- P&L presentation, turnover and the VAT registration threshold
- Assessment time limits and penalties
- Rent guarantee insurance: the intermediary exemption, block policies, VAT return treatment and partial exemption
It's a summary of a formal Note of Advice from Mike Payne of Grosvenor VAT Consultants, commissioned by DocDrawer. It isn't tax advice, and no duty of care is owed to readers.
General guidance, not tax advice — speak to your accountant or VAT adviser about your own circumstances.
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