The Council has commercial buildings where parts are rented to third parties. Some of the properties are not opted to tax and therefore exempt from VAT. Rent, insurance costs, service charges are invoiced as exempt, however a query has been raised about VAT treatment when recharging ‘additional services’ as the Council receives invoices from contractors and utility providers with VAT (not water).

Leaseholders only occupy and use part of these Council buildings and these VATable costs relate to entire Council buildings so a percentage is calculated based on their occupancy.

The question is should all these additional costs be charged as exempt or subject to VAT. Examples below -


Supply of Gas

Supply of Electricity

Water rates


Gas Testing

Legionella Testing

Electrical Testing: fixed-wire only

WC and Hygiene services

Maintenance (inc window cleaning)

Repairs and improvements

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