VAT on New Build to sell

[blairwink]

I know VAT is exempt on new build if its a self build so to speak. I am building a small house to sell and I am getting quotes in that say 0 VAT as new build. Do the same rules apply if I am selling straight after it is finished? thanx

[CTAstudent]

The sale of of a residential building is zero rated (Ref; VATA 1994 sch 8 group 5).

[blairwink]

Thanks, but are the materials and labour to build the house prior to sale zero VAT too? even though I will not be living in it.
thanks again

[CTAstudent]

Not sure i understand what you mean but here goes.

The original builder buys materials to build a house from scratch. He must be VAT registered because he will be able to recover all the input vat on the materials and then sell the residential property zero rated.

If the original builder is not vat registered as long as he is building a residential property he can use the DIY builders scheme.

This is when he will pay for VAT on the materials, pay subcontractors he gets to work for him zero rated because if they are registered for VAT they will not charge VAT on a new build and then what he does is recovers the VAT from HMCE he paid on qualifying expenditure from the HMRC.

[blairwink]

Thanks CTA

perfectly answered. Basically I get my subbies to charge me 0 VAT and I claim any material paid for with VAT at the end. thanks mate

[deebee]

One minor correction - if you are selling the house 'by way of business', you cannot use the DIY scheme. You would have to register, even for a one-off.