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04th February 2020

Is a landlord required to provide a tenant with an invoice in respect of the rent deposit monies?

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On the grant of a lease, the landlord may require a tenant to pay a rent deposit. If the landlord has opted to tax the property, requiring the tenant to pay VAT on rents due to the landlord, then the rent deposit monies payable will include a sum equivalent to VAT. However, the sum is only equivalent to VAT. This is because VAT is not actually payable when the monies are deposited, as the landlord has made no supply and there is no tax point. This means the landlord will not issue an invoice at this stage.

Only if the landlord makes a deduction from the deposit monies during the term of the lease, does it make a taxable supply which is potentially liable to VAT. Whether a VAT invoice will be provided, depends on what the deduction is for. For example, a common deduction is for unpaid rent. However, no additional invoice will be issued for unpaid rent, as the tenant will most likely have received a VAT invoice with the rent demand.

For more information please contact Sarah Baron on 01223 461155 or click here to email Sarah.