Reduced Rated Vat And Suppliers Other Than Main Builder
Posted 13 July 2015 - 08:28 AM
I need some guidance on Section 708 VAT and how it applies to other suppliers other than the main build contractor.
For example if I wished to source a kitchen and say glazing from an independent supplier that would supply and fit can I get them to invoice me at 5%.
Or, do I have to get my builder to place the order (he would pay standard rated VAT and reclaim it) and then invoice on the net cost to me plus 5% VAT?
Thanks for your responses
Posted 13 July 2015 - 11:02 AM
The following assumes this is a conversion that qualifies under the VAT reclaim scheme. See the notes at the back of VAT 431C...
If one company supplies the kitchen and another company (or your builder) installs it then the kitchen should be 20% rated to you and you reclaim 20% from the VAT man. The installation should be 5% rated and you reclaim 5%.
If ONE company supplies and installs the kitchen they _must_ charge VAT at 5% on _both_ the kitchen and the installation. You can reclaim that 5%. This is explaned (badly) in section 11.2...
If you are a builder, the rate of VAT you charge for your work normally determines the rate of VAT you charge on any goods you ‘incorporate’ in the building (or its site) - see paragraph 13.3 - whilst carrying out that work. So, if your work is zero-rated or reduced-rated, then so are the goods.
Don't ask why it's done like that, it just is. The same applies to windows.
Edited by temp, 13 July 2015 - 11:10 AM.
Posted 13 July 2015 - 06:23 PM
I do not think I can reclaim VAT on this basis. I need to ensure that the supply of services are invoiced at 5% from the outset.
What I am unclear on is if the 5% VAT can only be applied by the main builder or can I get other services to also invoice plus VAT at 5% (subject to complying with legislation)
Posted 14 July 2015 - 06:13 PM
You are correct in that you can't reclaim 20% VAT on things you buy.
VAT Notice 708 is aimed at VAT registered builders and other trades. It says..
If you carry out work to an existing building you will normally have to charge VAT at the standard rate. You may, however, be able to charge VAT at the reduced rate of 5% if you are renovating or altering:
•an eligible dwelling that has not been lived in during the 2 years immediately before your work starts (although there is an exception explained at sub-paragraph 8.3.4), or
•premises intended for use solely for a ‘relevant residential purpose’ – see paragraph 14.6 – that have not been lived in during the 2 years immediately before you start your work.
As far as I can tell any VAT registered person or company that does work on the place should reduce rate. It doesn't appear to limit it to one contractor. You will need to provide them with proof it's been empty. See 8.3.2.
It used to be the case that you couldn't move in prior to work starting but that seem to have changed. See para 8.3.4.
Posted 14 July 2015 - 06:58 PM
I have all the evidence to show it has been empty so hopefully it will be relatively easy to convince service providers that I am not trying to swindle them or the tax man.
Posted 15 July 2015 - 10:25 AM
Although it's not necessary it might help if you give them a home made "certificate" as described in VAT 708. I think these are only needed if the building is for a charity or something like that but a nice neat official looking certificate might just be the convincer they need. You can add extra info that refers to VAT 708 8.1.1 and about evidence attached confirming it's been empty two years etc.