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HMRC internal manual

VAT Input Tax

HM Revenue & Customs
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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.