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'Qualifying building services’ and ‘related building materials’ are zero rated in respect of most of the construction costs of building a new house, or some other types of residential property. The same principles apply to conversions of non-residential property, although the reduced rate of 5% VAT is applicable.
Or is it?
To qualify for zero or reduced rating the ‘qualifying services’ must be used in the construction or conversion of a ‘building designed as one or more dwellings’.
VAT legislation says that a building is designed as a dwelling, or a number of dwellings, if the following conditions are met:
The first two points are fairly self explanatory and it is the third and fourth points, which are often overlooked, which can then mean that the whole project is liable to VAT at the standard rate of 20%.
To avoid falling into this trap:
If you require assistance with these complex VAT issues please contact us.
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