The complicated VAT life of a lease

Article Abstract:

It is possible for a landlord and tenant in the UK to incur considerable value-added tax (VAT) liabilities at any point during the life of a commercial building's lease. A landlord has the option to charge VAT at any time without notice, thereby raising the rent, unless there are provisions in the lease prohibiting such an action. Tenants whose landlords have chosen to exercise this option should demand evidence from the landlord that Customs had been validly notified about the option. Generally, tenants cannot recover any VAT they had been incorrectly charged. Other VAT-related issues that landlords and tenants should consider include premium versus rent, reimbursement to obtain a lease, reimbursement for additional rights, registration fees, fixtures, reversionary lease, reverse premium and rent-free periods.

Taxation, Commercial leases, Landlord and tenant, Landlord-tenant relations, Value-added tax

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Personal trading losses

Article Abstract:

Unincorporated traders can calculate the tax relief they may claim on trading losses by using the simplified assessment method. In this approach, relief on losses is determined with the use of a complex calculation that factors in issues such as income tax levels, NIC contributions, schedule of tax relief, time limitations on claims and the use of carryforward losses. The rules that cover such claims on personal trading losses are found in the provisions of the Income and Corporation Taxes Act as modified by the Finance Act of 1994. An illustration of the use of the simplified assessment method is presented, in relation to the task of determining the best way to treat trading losses incurred on a current-year basis.

Methods, Accounting and auditing, Tax assessment, Tax shelters, Loss deductions

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