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Lets charge VAT

Or then again, let’s not.

This note is about misplaced apostrophes (or apostrophe’s?) and holiday accommodation. The point is this: the usual VAT exemption which applies to the letting of residential property does not apply to the grant of an interest in, right over or licence to occupy “holiday accommodation” – being accommodation which is held out as suitable for holiday or leisure use. In many cases of course this will not matter – income from even two or three holiday cottages is unlikely to be over the registration limit. If letting holiday accommodation is your sole business it’s likely you will need a sizeable portfolio before you need to register (bear in mind that long-term out-of-season lettings of holiday accommodation normally remain exempt).

But the trap is that if the owner is already registered for VAT, any income from lettings of this kind will automatically be subject to VAT: remember it is a person who is registered, not a business.

How to solve it? The obvious route is to ensure that the holiday lettings are made by a different entity from the main business – perhaps a husband and wife partnership if the main business is a sole trade or (if no suitable flesh-and-blood partner can be found) by an LLP between an individual and a wholly-owned company.