What rate applies, please?

[robbob]

Having had no response from the client regarding paperwork confirmation relating to his project I have looked at the council planning applications. The application applied for states:-
"Demolition of pigsties. Erection of 5 bed house with parking area at front"

Presumably this is new build status, not renovation? Therefore zero rated?

Probably / Possibly

https://www.gov.uk/vat-builders/new-homes

One scenario where there may be issues would be if there is a restriction on the ability so sell that house on its own, this can be the case with farm buildings and i still default in this regard to my suspicion being aroused by your customer handing over 5% vat rather than withholding the whole amount of vat. We are bordering here though on issues that are probably unlikely to apply - my paranoia perhaps but having seen enough vat visits where vat inspectors have been a bit anal in their requests for proof of lower reducing rating. The very complex nature of the rules don't help in that all the boxes need to be ticked and a reason for non zero rating may not be obvious.


http://albertgoodman.co.uk/articles/new ... s-lowdown/

When is ‘a dwelling’ ‘not a dwelling’ – beware the effects of planning restrictions

As mentioned above, VAT is a very complex area and full of pitfalls. One such pitfall is the VAT treatment if HMRC’s definition of a dwelling is not met. For example if there is a planning restriction which is generally enforced by what is known as a Section 106 agreement or where the new dwelling cannot be sold separately there could be significant VAT implications. In these cases, for VAT purposes, the building is not seen as a ‘dwelling’. In which case, all construction costs will be liable to VAT at the standard rate of VAT, and the DIY house builder’s scheme (see below) cannot be used to recover the VAT charged.

[section 44]

Presumably this is new build status, not renovation? Therefore zero rated?

Sounds like your service was zero-rated.

[echo]

[Helpmemum]

Thanks for your continued help.

I have contacted the planning department today as the planning permission I thought I had found was dated 2006! I can not see any current plans on the Council website so still unsure whether these are renovations or new build. Client not responding to emails asking for confirmation.

I should also mention (just in case I didn't) that we did the roof on the original building at the property too which is where I think the client got the 5% VAT idea from. so ......

When we went to the site there was an existing, unoccupied building and two part built houses on the site. One of the 'new builds' has a party wall to the original building. The second property is, I believe, built on former pig pens. (Self builds by two brothers who dont speak to each other - really helpful).

We billed brother 1 for re-roofing existing property + 20% VAT. He tells me it is only 5%. I look up planning permission and see (what I know know is old permission) to convert property to two dwellings so change to 5% as requested. (This I think is still ok as long as house was unoccupied for 2 years). Despite requests, no confirmation received from brother 1.

Do roof on property built on pig pens. Brother 2 says 20% VAT as he is claiming back VAT. He pays alsmost all of bill but decides not to pay £1500 (as he wants to sort out the number of secondhand tiles he was supplied by another) for which we have taken him to small claims court. Rather awkward when all three properties are on the same site.

Do roof adjoining original property. Send invoice with 20%. He pays in instalments (!!!!!) then decides he only wants to pay 5% so takes it upon himself to deduct 15% from VAT from invoice.

Now, as you have advised this project may well be 5% rated or it may be zero rated. I'm sure you can see how difficult it is to deal with these people.

I doubt whether the Council will speak to me about the planning applications involved but I am trying to get the information so that I can amend the invoices. I don't have a crystal ball to know whether the original house was unoccupied, or whether something was demolished to build the new properties or whether they new houses are classed as renovations.

I do know that this is completely doing my head in!

[robbob]

I think it may be simpler just to concede defeat and go with whatever rate you think is appropriate based on the information you have, keep notes as appropriate and not worry too much.

[Helpmemum]

Thanks!

[Helpmemum]

Oh no, it's me again!

I have eventually got through to Planning Department who tell me the following:

Brother 1 had a replacement roof put on existing property and new build property.
Planning permission granted: "Erection of two storey and single storey extension on the west facing elevation. Subdivision of the building to form two houses (1x3 bed and 1 x 2 bed) Provision of four car parking spaces (Amended plan)." So he has actually built the new property on the side using party wall. There was a single storey building on that part of the site. So, has he divided the property, carried out a renovation or built a new house?

Brother 2 has built his new house.
Planning permission granted: "Partial demolition of existing pig sties and erection of 5 bed dwelling."
So is this a new build or renovation?

After this I'm getting a job in Tesco (other supermarkets are available)!