7 July 2012    |    Uncategorized

Hairdressers who rent chairs – beware of VAT

From 1 October 2012, the Inland Revenue will be trying to change the rules on hairdressers who rent chairs.  The technical rule is that the rules on ‘chair rental’ will change so that it is being specifically included as an ‘exception’ to the ‘exemption’ in the VAT legislation within VATA 1994, Sch 9, Group 1.

OK, but what does that mean?

HMRC’s contention is that in many instances where the owner of a Hairdressers (or Barbers) may have a ‘chair’ for their own clients and rent out 3 or 4 other ‘chairs’ to self employed stylists / barbers there is in fact only one business (that of the owner) and not 4 or 5 separate businesses.  The result of this is that where all of the businesses would separately be under the VAT registration threshold of £77,000 a single business would be above the VAT registration threshold.  The National Federation of Hairdressers has agreed guidelines with HMRC to help Hairdressers and Barbers determine if they are operating a single business or not.

If you need more information, please contact us straight away. 

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