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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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Armstrong Watson LLP is a limited liability partnership registered in England and Wales, number OC415608. The registered office is 15 Victoria Place, Carlisle, CA1 1EW where a list of members is kept. Armstrong Watson Accountants, Business & Financial Advisers is a trading style of Armstrong Watson LLP. Armstrong Watson LLP is regulated by the Institute of Chartered Accountants in England and Wales for a range of investment business activities.
Armstrong Watson Audit Limited is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Registered as a limited company in England and Wales No. 8800970. Registered office: 15 Victoria Place, Carlisle, CA1 1EW
Armstrong Watson Financial Planning Limited is authorised and regulated by the Financial Conduct Authority. Firm reference number 542122. Registered as a limited company in England and Wales No. 7208672. Armstrong Watson Financial Planning & Wealth Management is a trading name of Armstrong Watson Financial Planning Limited. Registered Office: 15 Victoria Place, Carlisle, CA1 1EW