Tip of the week from the Real Estate Asset Management Group

The rate of VAT reverts to 17.5% on 1 January 2010. The tax point arises on the date of issue of the VAT invoice or the date of receipt of payment, whichever is first. For quarterly rent payments due on 25 December, if you receive the payment or issue the VAT invoice on or before 31 December, VAT should be charged at 15%.

If you receive payment or issue the VAT invoice on or after 1 January, you can either: 

a) charge VAT at a rate of 17.5% on the whole quarter's rent; or

b) elect to charge 15% on the rent for the period 25 December 2009 to 31 December 2009 and 17.5% on the remainder.

If you only issue the VAT invoice upon receipt of payment, we suggest that to avoid any risk of undercharging VAT you send a note to your tenants explaining the above.