The dreaded VAT - guidance please

[L1zzy]

Having waited 18 mths to find out if I was going to lose my job or not and postponed building work I have decided I can't go on putting my life on hold (job still no clearer) SO I'm going to approach an architect. My question is when must you pay VAT on uilding work ....... Cottage Grade 2 listed in Conservation area rear 'extension is 2 smallish rooms comprising kitchen & study/dining room with an uninterrupted panoramic views over the surrounding countryside.Concrete floors (uneven and sloping++) and roof of marine ply covered in roofing felt. All of which are most unattractively 'stuck' to the original part of the cottage with a 12inch wide line of Black Bitumen and a bit of tin flashing for authentice effect.The CO's view was as long as footprint doesn't change I can 'use my imagination' as current structure 'does nothing for the cottage'. So in my dream I want to replace the current rear wall using Green Oak and glass to create a single kitchen/dining room (CO has said as pitch of roof is very shallow I will need to have a slate roof.) a builder recently said i was lucky as I wouldn't need to pay VAT but I'm not sure what rule(s) are ...any views folks would be welcome.

 

[MattJ]

You've been ignored, Lizzy!

Here's my VAT experience, for what it's worth.

First off, if you talk to the VAT Office, they'll tell you that you always pay VAT, but sometimes the rate of VAT is 0%. Not useful...

Approved alterations are what get zero-rated. A over-simple explanation is that whatever requires listed building consent can be zero-rated. So repair or maintenance of existing building doesn't count. However there are catches. Sometimes work that is an approved alteration might not be zero-ratable and vice-versa sometimes work that doesn't require listed building consent can be zero rated.

For instance, I had central heating fitted in my GII cottage. The CO officer was very clear that I didn't need consent to fit the central heating as no historical fabric was going to altered. So my listed building consent doesn't mention central heating. However the VAT rules say that first time installation of central heating is zero-rated, so my plumber zero-rated it.

It's the contractor will do the zero-rating. If they don't believe something can be zero-rated, they won't zero-rate it. The risk is theirs as they'll have to cough up the VAT if they incorrectly zero-rate. If you've already got a builder who is prepared to zero-rate, then you're already ahead of the game.

Not sure I understand your plans in detail, but it might be that replacement of your roof and rear wall with something different might be zero-rated but replacement of the concrete floor might not. If you're planning to get pieces of work zero-rated, try to make sure they appear in the listed building consent.

To fight my way out of this regulatory maze, I hired a VAT consultant. He examined my plans, did the interpretation of the VAT rules, wrote letters to my contractors advising what was zero-rateable, and in the case of one jittery contractor wrote a letter of indemnity so that if a VAT inspection disagrees, the contractor can bill me for the VAT.

Here's some PP advice on same subject.
http://www.periodproperty.co.uk/uncle052006.shtml#uncle052006-02

Hope that helps somewhat
Matt

 

[Gervase]

Remember to talk this through with your builder before work starts - s/he will need to give you a VAT invoice with the zero-rating spelled out, and should ask you for a copy of the LB consent as evidence that the work is zero-rated.
Be aware that some builders will refuse to do this, being unlettered in the ways of the exciseman. Persevere, and explain to them that they can still recover the VAT they spend on their materials. They simply need to tell the revenue that the relevant work was carried out at a zero rate when they send in their return (something I'm ploughing through as I write...Zzzzzz).
You'll find the relevant advice rendered in officialese in Section 9.1 of Notice 708 (Buildings and Construction) at http://www.hmce.gov.uk. Be warned, though; the whole document is 80 pages long!

This is from the guidance:

9.3 Is the protected building being ‘altered’?
A building is altered when its fabric, such as its walls, roof, internal surfaces, floors, stairs, windows, doors, plumbing and wiring is changed in a meaningful way. But works of repair or maintenance, or any incidental alteration resulting from works of repair or maintenance, are always standard-rated, even if the work has been included in the listed building or scheduled monument consent.
9.3.1 What are works of repair or maintenance?
Works of repair or maintenance are those tasks designed to minimise, for as long as possible, the need for, and future scale and cost of, further attention to the fabric of the building. Changes to the physical features of the building are not zero-rated alterations if, in the exercise of proper repair and maintenance of the building, they are either:
- trifling or insignificant, or
- dictated by the nature and use of modern building materials.
Similarly, if the amount of work or cost is significant, that does not make the work a zero-rated alteration if the inherent character of the work is repair and maintenance.

So it does look as if you will be able to rebuild your extension in a significantly different way with zero VAT. Sadly, though, your architect's fee will not be zero-rated. We hairy-4rsed tadesmen can be zero-rated, but not professionals!
And, if the place isn't listed, then the VAT situation is a whole different can of worms depending on occupation and use, but that's for another time...

 

[L1zzy]

Many thanks to all - this information does tie in with my builder saying as we were 'just supposing' of course the work will be zero rated. I must admit I was sceptical and certainly won't count my chickens but thankyou all for your help and of course also Skier Hughes who sent me a useful link.