Zero VAT alterations and new work to listed buildings.

[ljn]

17.5% VAT is payable on all domestic building work, while new building is zero rated VAT.

There is no VAT on alterations and new work to listed buildings.

The list of "approved zero-rated works" includes: installation of central heating, new kitchens and bathrooms and replacement of windows.
Underpinning is considered a "downward extension", not a repair and is therefor VAT exempt.
Repairing a window would have 17.5 VAT, while replacing windows to make them aesthetically compatible with the building is zero VAT.
The onus is on the contractor to decide what VAT is payable

These are from the a Sunday Times Guide to Owning A Listed Home i found in a pile of leaflets while cleaning up.

Have I come across a treasure or should I bin the leaflet?

 

[skier-hughes]

The onus is on the contractor to decide what VAT is payable

This is a big bit, as if the revenue decide your work should have had vat on it he'll be the one paying up, not you.

 

[Flyfisher]

I agree with Skier - it's important to discuss VAT with your contractors before any work begins so there is no misunderstanding as they are the ones who need to omit the VAT from their invoice.

I've had new plumbing and electrical work done and it has been treated as zero-rated for VAT by the contractors concerned. I pointed them to the relevant guidance on the web and also gave them a copy of the listed building consent for their records. Section 9 of VAT Notice 708 describes the rules: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000513#P896_85590

Having LBC for the specified works is effectively 'proof' that the work is 'approved alterations' rather than repair because, strictly, LBC is only required for alterations. Certainly, in my case, this approach satisfied our contractors and they simply omitted the VAT from their invoices.

However, if you do the work yourself there seems to be no way to recover the VAT on materials you buy (unless you are VAT-registered perhaps?) - although I'd be happy to be proved wrong on this as I've paid a fair bit of VAT on materials for the roof work I've done myself and would love to recover it if possible!

 

[ljn]

In the HM Customs and Revenue "Buildings and construction Notice 708" it says that VAT is always payable to a retailer,so it is only the VAT registered installer or developer that can claim it back and not pass it on to the end user. So no good for DIY.

I love the bit where it defines wether a wardrobe is "incorporated building material" of furniture.

At the end of the document there are "certificate forms" which you can fill in and issue to your contractor. Issuing one puts the responsibility on you, the building owner rather the the contractor.
Using the listed consent is a good idea, though.

 

[KayW]

We are currently building a log cabin and garage in the garden of our period house. All work done by contractors on the house is charged at reduced rate of 5% including any materials provided by the person doing the work. This is because we are reducing the number of residential properties from two to one (we have just knocked through). We have to pay full 17.5% on materials we buy ourselves.

The stupid bit is that if we buy the log cabin/garage as a kit and put it up ourselves we pay 17.5% but if we pay them to put it up and provide the kit - we pay 5% on the whole lot. It actually works out cheaper for them to put it up - so am not complaining but go figure :roll: :roll: :roll: At least this means I can get out with something on the house whilst it is built.

We are finding we have to indemnify our contractors so if the get inspected and found they should not have reduced to 5% they will come back to claim the rest from us.

K

 

[shelli]

We are VAT registered and have trade accounts too. (NB we are not builders but do look after several hundred houses and they often need repairs so we have a busy maintenance dept)

We thought Hurrah! trade accounts - buy materials through the business for our property renovation at trade rate, invoice ourselves from business, pay our bills to business, reclaim VAT in business and save 17.5%. "Bad news" said accountant - "it's your house so you can't do that" "But...." we said. "But me no buts" he said - "you can't do it - it's not allowed, it's VAT evasion, now go away and stop bothering me or I'll charge yer" (He's tough!!)

Believe me I have tried to find a way round this over the last 12 years as we have variously bought to let and fixed up en route
It seems impossible if it's your own home

Shelli X

 

[KayW]

In the HM Customs and Revenue "Buildings and construction Notice 708" ....At the end of the document there are "certificate forms" which you can fill in and issue to your contractor. Issuing one puts the responsibility on you, the building owner rather the the contractor.
Using the listed consent is a good idea, though.

ljn you dont have a url for this "certificate" by any chance - cant find it on the end of the notice.

Thanks

K

 

[ljn]

The certificates are at paragraph 18 - more like forms you fill-in:

http://customs.hmrc.gov.uk/channels...ntent&id=HMCE_CL_000513&propertyType=document

 

[KayW]

Thanks did not notice them - had assumed they would be at end. Cheers

 

[Penners]

However, if you do the work yourself there seems to be no way to recover the VAT on materials you buy (unless you are VAT-registered perhaps?) - although I'd be happy to be proved wrong on this

Sorry, FF, but you're not wrong. I went into this extensively with HMRC when I started on our current listed building works. After a number of exchanges of letter with them, which failed to give what I regarded as an unequivocal ruling, I telephoned them. The advisor I spoke to gave me an absolutely categorical "no" to reclaiming VAT on materials for DIY work.

The only way to avoid VAT is to get a VAT registered builder to do the work, and persuade them that they should not charge you VAT. And, as has already been observed, LBC must have been granted for the work.