Readers’ forum: Input tax on rent invoices addressed to the director

I act for a consultancy business that trades as a limited company and occupies office premises for 15 staff.

The VAT complication is that the office lease is between the landlord and the company director and not the company.

This arrangement was agreed because the landlord wanted the extra security of knowing he could pursue an individual for any unpaid rent rather than a company with very few assets. The landlord has opted to tax the property so charges VAT on the rent and addresses all invoices to the individual director.

HMRC has now done a compliance visit on the company and disallowed input tax claimed by the company for the past four years on the basis that the supply of office space is to the director.

The officer says that the director should have registered for VAT and opted to tax his interest in the property ...