Here at Bracey’s, our in-house VAT expert is often travelling the country providing VAT advice to individuals and organisations within the construction industry. However, over the last few months, a few key examples of firms and individuals falling foul of VAT rules has come to our attention.
VAT For Property Alterations or Renovations
We’ve spoken to Michele Harris, former HMRC VAT inspector and now VAT Director at Bracey’s, to tell us more about maximising the VAT that contractors can claim on projects. As well as ensuring you comply with the legislation.
An individual renovates a property that has been uninhabited for two years thinking that all the VAT on the project could be claimed back under special VAT rules for DIY housebuilders.
The rules that the individual was relying on to seek relief do not apply. However, a 5% reduction could have been applied to all supplies if the builder purchased the goods and supplied the installation services. This has resulted in the individual paying 20% on all of the building materials and not being able to reclaim it.
Insult to injury
Before all building works and extensions were completed, the individual took up residence in the property. This now means all works must be charged at 20% VAT. However, had the builder started the work before the house was occupied, they could have charged the client 5% VAT on the build. Click here for more rules on VAT on alterations of empty residential premises.
Always approach VAT at the beginning of the project. We understand that VAT is often an afterthought for construction projects. However, the earlier you consider it, the more money you are likely to save. If you fail to seek the advice of a VAT specialist at the start, the whole structure and organisation of the project may prevent any future VAT reclaims.
We work directly with contractors to provide added value for your customers, and we can work directly with you on a consultancy basis if you are planning construction works. Please contact us on 01438 727 141.