ProDave, on 01 June 2015 - 06:39 PM, said:
This is an interesting dilemma.
I'm just appointing some guys to pour my concrete foundations, then build up the blockwork.
we discussed who is providing the materials and we agreed they would provide them as they can zero rate them along with their work. If I supply them I won't get the VAT back for a couple of years. I just have to watch they don't charge too much of a mark up.
This will only work if the contractor is registered for VAT, i.e. they claim back the VAT and then charge you VAT at zero percent on both materials and labour.
If a contractor is not registered for VAT then the self builder should always pay directly for materials from the supplier not the contractor because they can eventually claim back the VAT.
The answer to overcome the unfair anomaly that a VAT registered builder can claim VAT back during a build whereas a self builder can only claim back at the end of the build is to use a VAT registered builder for the build. Think laterally: what is stopping your friend/relative setting up as a VAT registered builder, you remain his sole customer and he makes a small loss at the end and then the company can be closed. A limited company is not needed. Ridiculous but if you want a solution!