VATLP04320 - Taxable person: managing agents for property: recovery of input tax
Often, costs relating to the repair and maintenance of the landlord’s property will be invoiced directly to the managing agent. This does not, however, entitle the managing agent to reclaim input tax on these costs.
If the landlord is bound by the terms of the lease to carry out repair and maintenance duties, the landlord cannot escape from these commitments even by inserting a clause into the leasing agreement. It follows that the costs relating to repair and maintenance is proper to the landlord and not the managing agent. The managing agent is merely acting as agent of the landlord.
Where the repair and maintenance invoice is made out to the landlord, the agent may pay the gross amount and seek reimbursement from the landlord. The landlord will recover the input tax in the normal way. Where the managing agent is acting in his own name and receives repair and maintenance invoices for the upkeep of the landlord’s property, the agent may reclaim the input tax and pass on the same sum as output tax to the landlord using section 47(3) of VAT Act 1994.
The agency position is not affected when a managing agent is also a tenant in the building being maintained. The landlord remains the person to whom the supply is made.