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Why Do HMRC Bother With Reduced Rating For Conversion?

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#1 cjard


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Posted 03 February 2016 - 03:16 PM

Anyone know why the revenue bother with introducing a reduced rate of VAT for conversions, when the self builder can reclaim it anyway?

Factory, turnkey converted to house, builder does everything and charges 5%, householder reclaims 5%
Factory, turnkey demolished and rebuilt to house, builder does everything and charges 0%

If HMRC's financial position is the same at the end of these two operations, why did they bother? Are there some situations wih a conversion where it is not possible to reclaim the VAT and hence HMRC does make a "profit"?