Readers’ forum: Is deregistration an option for property owner?

I have received the below email from a property managing agent for whom we prepare a lot of service charge accounts for each of the properties they manage. The service charges that are charged to each tenant do not normally include VAT.

‘This is a potential new client who developed a building comprising one ground floor shop with three flats above it. He owns it personally and has been self-managing and doing the accounts and VAT. He has been charging the shop VAT but not the flats. Do the VAT rules allow this? I don’t think he has any other developments where it would be advantageous to charge VAT so his annual VATable income is always less than £83 000. Would it be a problem to cancel their VAT registration by deregistering?’

Query 20 226 – Confused.

Service charges are exempt for residential property.

Service...