management fee's on service charge

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    Assume a roof replacement by another company who is vat registered. The net cost is £1000 and £1200 with vat added. Thus the landlord will need to add 20% management fees to the cost of roof replacement. Should the management fees be £200 Or £240?


      You take the total cost of £1,200 and apply a management fee of 20% which would be £288 (£240 plus £48 VAT if the manager is VAT registered)


        I agree with the assessment but see the lease extract below
        y lease allows 20% on management fees on cost. see extract of the lease below

        Clause 7 of the Fourth Schedule “The fees and disbursement paid to any managing agents appointed by the council in respect of the Building Provided that so long as the council do not employ managing agents, they shall be entitled to add the sum of twenty per cent to any of the above items for administration”.

        Clause 10 of the fourth scheduleAny value added or other tax payable in respect of any costs expenses outgoings or matters falling within any paragraph of this schedule”.

        For example, my proportion of the service charge is £1,000 and with VAT added is £1,200.

        According to the lease, VAT is in clause 10 of the fourth schedule of the lease, is the landlord allowed to charge 20% management fee on £1,000 or £1,200? Should the management fee be £200 or £240?


          You take the actual expenditure and add on 20% under clause 7 plus VAT if it applies under clause 10.


            Thanks, just to be clear I add 20% management fees to £1000 net of vat and then add £200 vat. Thus making a total of £1400 For the service charge.

            Or 20% management fees to £1200 including vat, with a service charge of £1440.
            which on is correct?


              I explained in #15, you take your total service charge, then you add the management charge plus VAT if it applies.


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