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How can I charge VAT on Service charges?

Zenya Allen
Zenya Allen
  • Updated

The process of charging VAT to a Service charge schedule can be carried out once the Freeholder, Head Property, Management Company and Leaseholders have been added to your database. 

This article includes: 

VAT Defaults

 Note

You will need access to User Defaults to edit your default settings. These can be accessed by those who have the correct permissions

You will need to set up the Service charge income in User Defaults so each Service charge item charges vat.

  1. Click Defaults on the main toolbar
  2. Click User Defaults from the dropdown menu
  3. In the Standard tab, click VAT and Disbursements
  4. Click the Income tab
    1. On the Service Charges row, tick Taxable and change the VAT column from 0 to Standard
    2. Click OK
    3. Click Close

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Check setup of VAT

Check your ability to report on the VAT you are going to collect. To do this:

  1. Click Reporting on the main toolbar
  2. Click Tax/NRL from the dropdown menu
  3. Click VAT Reports 

This will then allow you to create a VAT return.

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Add VAT number to the Head Property

Once the above has been set up, search for the Head Property for which you need to charge VAT on the Service charge, then enter the VAT number. 

  1. Double click Properties from the side menu
  2. Click Search for Head Properties Only
    1. Search for the relevant Property using Search Text by Name, Code or Status
    2. Alternatively, find the Property using Additional Options from the dropdown menu
    3. Or select a Branch if multi branch is set up on your CFPwinMan
  3. Click on the Property
    1. Enter the VAT no. where indicated
    2. Click VAT Report Defaults. The information you need to enter should be provided by the Freeholder or Management company from the VAT certificate provided to them by the HMRC
    3. Your Head Property is now set up to charge VAT on the schedule
    4. Click Save and Exit

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Set up the Service charge schedule

You will now need to set up your budget in the Service Charge Administration.
For more information on How do I set up a service charge budget, click here

 Note

The budget amounts you post on to the system must be NET of VAT

Once you have created the budget and processed the contribution for the leaseholders, you will see it will give you a breakdown on the VAT being charged

Related articles: 

Service charge user defaults

How to add arrears for a service charge block

How can I add an end of financial year date to a service charge block