VAT on building work

[Carol]

We are having work done on a wall 'in the curtilage' of a listed building with LBC and planning permission. Does this qualify fo the zero rated VAT?
Does anyone know?

 

[skier-hughes]

It would help to know, is it a repair, replacement of a part or whole, an addition to the wall....
Is the person who is undertaking the work vat registered?

 

[Pford75]

Carol - We had to pay VAT on the reconstruction of our wall (which was done with LBC).

It depends on what you are having 'done'. Repairs are not eligble for VAT relief....new work is (so perhaps if you were building a new section of wall, you might be able to get VAT relief)....but if it's repairs or minor alterations, then I suspect not

 

[Carol]

It's the 'providing vehicle access and parking' through an old wall at the rear of our garden. We had to get LBC and planning and think it is counts as an alteration as it will require new pillars, gates etc. It will provide parking/car port but not a whole new garage. Given the palaver over achieving the LBC - "And where will your sand be coming from?", we half hoped we may avoid the VAT to compensate for the trauma!

Have trawled through the regs and while one part says all curtilage work qualifies, another says walls, fences etc. in curtilage don't, but it might if we build a garage.

Seems to be a minefield.

 

[Gervase]

It would appear to be a matter for debate.
The chapter and verse from HMRC states:

Works of alteration to fences and walls do not normally qualify as approved
alterations as the fences and walls can be identified as separate structures
from the protected building, even if they are attached to the protected building.
Where the wall or fence is attached to the protected building the works to the
wall or fence qualify for the zero rate only insofar as they alter the fabric of the
protected building itself.

However, it could be argued that the work on the wall would of the kind you envisage could be classed as part of the listing protection: "Fixtures and curtilage buildings - ie. any object or structure which is fixed to the building, or is within the curtilage and forms part of the land and has done so since before July 1948 - are also treated as part of the building for the purposes of listed building control.".
Does the wall in question form a continuous structure anchored to the building? If it does, then the C Mason case would probably allow you to zero-rate the work. The other applicable case for work on the curtilage of listed buildings is Zielinski Baker. You will probably need to seek legal advice.
If you are given the OK to zero-rate the work, make sure any contractor you appoint is VAT registered, and then give him a written schedule explaining that the work is zero-rated and that all invoices should be adjusted accordingly.
Any subbies working for that builder will charge him VAT at the standard rate and he will simply adjust his VAT returns accordingly. Any VAT-registered independents working directly for you alongside the main contractor must apply the same rate as the contractor once you have informed them of the zero rating.
If you have any doubts, or if the contractor is uncertain, call the HMRC helpline on 0845 010 9000, and refer to guidance document "V1-8A: Construction", which is the VATman's bible for building work. You may be able to download it from the HMRC website.
It cites the existing case law for boundary walls and fences as:

10.5 Fences, railings and boundary walls
The construction of, or works to, fences, railings and walls do not qualify as
approved alterations as the works are not to the fabric of the building.
Reginald David Bunn (1,467; decided 11 August 1983): Erection of a
wooden fence in the garden of a house. Held: not an alteration.
R G Powell t/a Anwick Agricultural Engineers (14,520; decided
15 October 1996): A church had railings erected to control entry to its
grounds. The railings were not fixed to the church at any point. On the
northern side of the site the railings were fixed on the top of a church wall,
which touched the church - held: approved alteration. On the southern side
the railings were freestanding - held: not an alteration.
C Mason (16,250; decided 2 September 1999): The owner of a listed
cottage constructed two sections of brick wall divided by a hedge. One
section abutted the cottage. To allow for movement it was not tied into the
cottage. This section was held to be an approved alteration. The second
section, which did not abut the cottage, was held not to be an alteration.

It really is an area where you need to weigh up how much VAT you will save against the fee for a solicitor to investigate and argue your case for you.
It would be nice if you did, though, as we need more definitive case law in this field! :wink:

 

[Flyfisher]

Typical bl**dy bureacratic ineptitude! Why do they make everything so complicated (to keep themselves and all their advisors in a job probably).

Surely, if the work requires LBC it must be an alteration to a protected structure, in which case it is VAT-exempt.

If it's not a protected structure then the work doesn't require LBC, in which case VAT is payable.

Simple - or it should be. Pah!

Find a builder who is willing to do the work and not add VAT to his invoice. Give him a copy of your LBC as proof that the work is "approved alterations to a protected property", and also for his accountant in case of an audit. Point him to HM Customs & Revenue reference notice 708, section 9


PS: As an aside, I noticed that section 9.3.2 in the above reference gives "Examples of repair or maintenance work and alterations" and guess what?

"Replacement of rotten wooden windows with UPVC double glazing: Repair or maintenance"

So, according to the VATman, uPVC windows are repairs and, by implication, would not require LBC :shock:

Another example of joined-up government?

 

[skier-hughes]

Find a builder who is willing to do the work and not add VAT to his invoice. Give him a copy of your LBC as proof that the work is "approved alterations to a protected property", and also for his accountant in case of an audit. Point him to HM Customs & Revenue reference notice 708, section 9

You may need top provide him with an indemnity though in case Customs decide he has to pay over the VAT.

 

[Penners]

From the way you asked your original question, I infer that the builder has already started work. That being the case, you're going to have to try and provide him wth enough evidence to persuade him that the work can be zero-rated.

Do pay close heed to what Gervase says above. He's an expert.

 

[Flyfisher]

Penners is spot-on. As I understand it, you cannot claim back any VAT already paid, regardless of whether the work would have been zero-rated or not. To avoid paying the VAT you must ensure it is never invoiced in the first place.

Graham, I agree, a builder might ask for such a thing. It's also quite possible that some builders would refuse to omit the VAT in any case. But that should all be part of the contract negotiations before the work is started.

 

[Gareth Hughes]

Typical bl**dy bureacratic ineptitude! Why do they make everything so complicated (to keep themselves and all their advisors in a job probably).

Shhhhh! that's the best-kept secret of all and you've just ruined it!

 

[AMc]

I tried to clarify with HMRC the VAT position of my work, returning "2 dwellins" (sic) into 1. I was told "VAT is a self certified tax and it is the responsibility of the VAT registered business to apply the correct rate."
When pressed I was told that HMRC would not give a definitive statement in writing on my job unless one of my contractors was audited and found to be applying the wrong rates.

In practice most of my contractors have been happy to take my extracts from notice 708 and a copy of my building control notice that shows the house split into 2 in 1993 as adequate proof to apply the 5% rate. I have also told them that if they are audited and we've misinterpretted the rules then I will pay the extra (God I hope that doesn't happen).
The liability lies withe the VAT registered business, they are responsible, not you so they need convincing which will take paperwork and possibly an assurance from you in writing to put it right should it come to it.

Whatever you do clarify the VAT rate in writing with your contractor(s) before you start if you pay the wrong rate you can only get it back from the contractor not HMRC and this will not be easy for either of you to do.

 

[Penners]

I tried to clarify with HMRC the VAT position of my work, returning "2 dwellins" (sic) into 1. I was told "VAT is a self certified tax and it is the responsibility of the VAT registered business to apply the correct rate."
When pressed I was told that HMRC would not give a definitive statement in writing on my job unless one of my contractors was audited and found to be applying the wrong rates.

Or, to put that another way: "We won't tell you what's right and what's wrong. But if you get it wrong we'll throw the book at you."

Nice.

What is it they're called? "Public servants"?

 

[AMc]

What is it they're called? "Public servants"?

I thought they were Civil servants, she wasn't impolite . I suppose they're leaving the door open in case the information I gave them was inconsistent/incomplete etc.

As a customer you have to convince your contractor not the HMRC, but the contractor may want some indemnity in case you've got it wrong. In the end its not the contractor's interest to reduce the rate or increase it unnecessarily as they have to hand it over to HMRC either way.

One supplier was told they could only reduce rate some skylights if they fitted them too. I can't see how they could be classed as anything other than building materials but that's what the HMRC 'helpline' told them so they charged me 15%

 

[Carol]

Food for thought anyway, thanks for all the advice. We haven't yet started work yet but are cogitating with our builder on the way forward. Am going to phone the helpline,to be fully confused tomorrow.

 

[Flyfisher]

The liability lies withe the VAT registered business, they are responsible, not you so they need convincing which will take paperwork and possibly an assurance from you in writing to put it right should it come to it.

Agreed - and I was half expecting our builders to ask for such an assurance, but they didn't. They seemed quite happy with the 708 notice and a copy of my LBC.
I'm sure the treatment of this whole issue must vary enormously across the land. I'm beginning to think I got lucky.

 

[Gervase]

I find I often have to tell clients that they don't have to stump up the VAT, and they're often surprised and delighted. I have to ask for the LBC and then invoice them with a reference to 708 and they're chuffed to bits.
Suits me, too, as it's always nice to have less VAT on the sales side every quarter.