BTL management agent - VAT treatment

[simontrent]

I've been helping a family friend to complete tax returns for his BTL property. During the checking of statements from the management agent I am surprised to see they are subcontracting maintenance and then marking up the contractors bill to add VAT. In other words, they instructed a plumber to fix a leaking tap. He invoiced them £100+VAT i.e. £120. They have then charged my friend £144 (he is not VAT registered).

I appreciate they are supplying a service but is there really "value add"?

Any experts that can advise.

Thanks

[Eric Mc]

a) Find a different agent.

b) Stop using an agent.

[simontrent]

Eric Mc said:

a) Find a different agent.

b) Stop using an agent.

Thanks.

Are they incorrectly charging the VAT element though? Unfortunately the family friend is a real creature of comfort and I need "evidence" to convince him to reconsider his choice of agent.

[sumo69]

I have a number of clients who use managing agents services and none do this - they are paying a disbursement on behalf of the landlord and no service is provided. Hence the deduction from the monthly rental should be the amount paid out (and evidenced by sending a copy invoice with the monthly statement).

The charge for management will attract a VAT charge if the agent is registered.

You should approach the agent seeking restitution - at best this was a mistake and at worse excess profiteering/theft.

David

[Eric Mc]

simontrent said:

Thanks.

Are they incorrectly charging the VAT element though? Unfortunately the family friend is a real creature of comfort and I need "evidence" to convince him to reconsider his choice of agent.

As Sumo says, they do seem to be "profiteering" by charging VAT on VAT - but at the end of the day, it is the customers choice whether they want to stay with such an agency or find an alternative way to manage the property.

[Wings]

Eric Mc said:

As Sumo says, they do seem to be "profiteering" by charging VAT on VAT - but at the end of the day, it is the customers choice whether they want to stay with such an agency or find an alternative way to manage the property.

^^^^agree, i have also found several Property Management Companies (hereafter PMCs) marking up property building insurance premiums by up to 100%. I have know problems with PMCs charging for their services, but all their charges should be clear and transparent.

I have recently submitted my views to HMG's consultation on residential property management.

https://www.gov.uk/government/consultations/reside...