VAT tips for building projects
Following on from some advice given by Traditional painter on their website about choosing a contractor and what questions to ask, we have added some tips which may save you some money on VAT
VAT registration is not obligatory until a company turns over more than £70,000 in a year (the 2010 threshold).
A VAT number is definitely a sign of credibility, but many top craftsmen work alone, and don’t need to register.
Be suspicious if a VAT registered company offers to do a job cheaper by not charging VAT. Not being alarmist, but the VAT man is omniscient and has great powers to act against both parties acting fraudulently!
AW Accounting http://awaccs.co.uk/tax-advice/vat-tips-for-building-projects have provided some tips relating to VAT on building work:
There are a few VAT specific savings available for building work depending on the project you are working on and the property:
Listed Property
Work on “adding” to the property is zero rated, but it is up to the contractor to decide on whether to charge or not. In many cases it is easier to just charge the customer. Examples of additions include: an extension; installing central heating for the first time; a conservatory; even adding an Aga where there was not a kitchen formerly. This however does not include general repairs and maintenance work. More information is available from your accountant, HMRC or the Listed Property Owners Club (www.lpoc.co.uk).
Changing number of dwellings in a property
Vat on changes in dwellings is charged at a reduced 5% rate, and this will include: subdividing a house into flats; opening up an existing house which was previously split into flats; making a building not previously a dwelling into one eg a barn or warehouse conversion.
Claiming VAT on a home office
Under a little known concession “where a domestic room or rooms is put to business use, you may agree to an apportionment using an objective test to the extent to which the room is out to business use”. So if 20% of an extension is to provide an office for you to work from home then you can claim 20% of the VAT, and also any specific items in that room which are for business purposes eg floor coverings, lighting.
This tips only provide a brief summary of what is available and may not apply to specific circumstance so please seek professional advice before taking any steps based on the information shown. If you would like advice in this or other areas feel free to call. Alastair Wood, AW Accounting – Accountants who “speak your language”
A good job there are professionals like you to advise on such matters! I recall renovating my parents’ home and one of the questions revolved around which parts of the job might be VAT free. I don’t recall the nitty gritty, except one conversation where the builder suggested the new kitchen could be VAT exempt if… He had our attention until he said that if the part of the extension the kitchen was to go in was a couple of inches separate from the main house! Whether it was the right advice or not, it involved a significant amount of money, and it would have been worth calling in an adviser like yourself for the definitive answer.
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