Management Agent Invoicing protocol and VAT

gerrymaguire

Good evening,

Our development employs a management agent to collect the yearly maintainence fees as well as isuue fines, employ a caretaker etc...

They recently issued statements instead of invoices for the yearly service charge. What I mean by that is that the email stated we were receiving an ammended statement of account now due for payment. There is no invoice number on the statement, it states it is a stament(no reference to the word invoice)

The development would pull in excess of €600000 a year in fees yet the management agent who issues the invoices on behalf of the management company is not VAT registered.

Would anybody be able to help with
1. Should the word invoice and an invoice number be present on any bill and
2. As the agent is collecting on behalf of the management company do they exceed the threshold required for VAT registration?

Many thanks

dubrov

1. They have to give you a statement or invoice clearly detailing what you owe.
Does the wording matter as it won't change what you owe?

2. VAT isn't charged on service charges. The agent is essentially just collecting for the management company (not for itself). When the management money buys services (administered by the management agent), VAT will be charged then.
The management agent will also charge the management company for the service that they provide and will add VAT to it. So the service charges may be 600k but the management agent fee might only be 25k of it and that is what will matter for the VAT thresholds. The management agent should have provided a budget for the upcoming year and you can see the management agent fee there.

gerrymaguire

Many thanks for your reply.
As I'm self employed and have a home office I apportion some of the maintainence fee to the running of the business. In previous years invoices were issued and a zero rate of VAT was applied. The new management company don't follow that procedure. My concern is that if I were to be audited, that revenue would not accept this document as an invoice for services, merely a statementt of account.

You are correct with the budget, they have set aside €49,000 for their fees.

Wanderer19

You are entitled to a proper invoice, showing the amount owed, how it's calculated (if a mix of charges) the date, period for charge, contact details.

VAT may not be charged on service charges but it should state that it's vat exempt, for clarity if nothing else.

An invoice is a request for payment, a statement is a list of what due/invoices issued/payments received.

gerrymaguire

Wanderer19 wrote: »

You are entitled to a proper invoice, showing the amount owed, how it's calculated (if a mix of charges) the date, period for charge, contact details.

VAT may not be charged on service charges but it should state that it's vat exempt, for clarity if nothing else.

An invoice is a request for payment, a statement is a list of what due/invoices issued/payments received.

That is my understanding too. When I invoice any company I work for, they insist on an invoice. This invoice must be numbered and quite often they will pay a batch of invoices from the monthly statement.

Thank you for your response. The management agent is refusing to give me a numbered document with the word Invoice on it.

gooseman12

Residential Management companies do not issue invoices, this would be standard practice**, so if you were receiving them before now the previous agent was incorrect in issuing them.

Residential Mgmt companies are also not vat registered so they cannot charge vat.

If we are talking about a commercial mgmt company then invoices and vat are applicable.

These items would all be clearly outlined in the company memorandum and articles document which you should be able to get your hands on.

While you're reading that document also check your lease document carefully as most residential leases in Ireland do not allow businesses to be run from units so you might want to be more careful in pursuing the agent in case they start asking questions and this whole thing backfires on you

**its been a while since I worked in the area but it might even be a breach of company law to issue an invoice but again checking the company documents will give you the best answer

gerrymaguire wrote: »

That is my understanding too. When I invoice any company I work for, they insist on an invoice. This invoice must be numbered and quite often they will pay a batch of invoices from the monthly statement.

Thank you for your response. The management agent is refusing to give me a numbered document with the word Invoice on it.

dubrov

I have just checked my own (residential) management company and the agent has never issued any invoices, just statements.
The company is run by a fairly large property management agent so would be surprised if they have messed up.

Deloitte have some guidance on commercial service charges here.

Alternatively, where the landlord buys in services and recharges them to tenants Revenue allow a concession whereby the VAT charged to the landlords is allowed to pass through to the tenants.

So the agent would pass through all management company invoices and you would pay in the proportion to your weighting ( and claim VAT accordingly).
I doubt any residential management company will provide this.

Also, you may already be aware, but I remember there are complications relating to capital gains and commercial rates where you claim expenses on part of your residence.

gerrymaguire

dubrov wrote: »

I have just checked my own (residential) management company and the agent has never issued any invoices, just statements.
The company is run by a fairly large property management agent so would be surprised if they have messed up.

Deloitte have some guidance on commercial service charges here.



So the agent would pass through all management company invoices and you would pay in the proportion to your weighting ( and claim VAT accordingly).
I doubt any residential management company will provide this.

Also, you may already be aware, but I remember there are complications relating to capital gains and commercial rates where you claim expenses on part of your residence.

Many thanks for you response.

Our previous management agent was also one of the larger ones but the gist I'm getting is that all they have to do is issue you an amount that they think you owe?

gerrymaguire

gooseman12 wrote: »

Residential Management companies do not issue invoices, this would be standard practice**, so if you were receiving them before now the previous agent was incorrect in issuing them.

Residential Mgmt companies are also not vat registered so they cannot charge vat.

If we are talking about a commercial mgmt company then invoices and vat are applicable.

These items would all be clearly outlined in the company memorandum and articles document which you should be able to get your hands on.

While you're reading that document also check your lease document carefully as most residential leases in Ireland do not allow businesses to be run from units so you might want to be more careful in pursuing the agent in case they start asking questions and this whole thing backfires on you

**its been a while since I worked in the area but it might even be a breach of company law to issue an invoice but again checking the company documents will give you the best answer

Thank you for your response. We are able to run a business as long as we own the property, which I do.

I may contact revenue to check what their take on requiring an invoice or will a statement suffice.

thegolfer

gerrymaguire wrote: »

Thank you for your response. We are able to run a business as long as we own the property, which I do.

I may contact revenue to check what their take on requiring an invoice or will a statement suffice.

Consider that before you contact Revenue. Is this your home? You may out at rush the entitlement to effective cgt exemption on disposal.

Revenue will record the call details.

Yeah, I'd be wary about rushing to Revenue about the expenses you are apportioning to your business.

Rulmeq

Deleted User wrote: »

Yeah, I'd be wary about rushing to Revenue about the expenses you are apportioning to your business.

Not just that, but also the impact on the PPR exemption from CGT if they are using some of it as a place of business. I might be over-thinking it, but it might turn out to be the most expensive call they make

gerrymaguire

I'm pretty sure the negative equity will take care of the CGT issue anyway!

Ive talked to a number a couple of properties with different management agents and it appears there is no industry standard. Some issue numbered invoices and some just issue statements.

Thanks all for your input.