Zero rated VAT

Katykat

I am having a downstairs shower room and toilet built onthe back ofmy housebecause I have some problems with the stairs. I have read that I could get some of the work at zero VAT, but how do I go about this , what do I need & what can I claim?

McKneff

You could also may check into getting a discount of your council tax if you are adapting your house if you are disable, if you dont already.

Sorry, please dont take offence, none is intended.

Katykat

No offence taken. I'm not actually disabled though. I am on ESA, but just under pension age. I dont get any disability benefits and mylocal council said it no longer issues regisred disability cards, so not sure what the VAT man would require. Thanks for the advice re council tax

pjclar02

Hello there

You need to ensure that the builder you select to carry out the work knows that the work is to be zero-rated for VAT when they quote for the work, and certainly before they start the work.

The builder will automatically zero-rate their supply providing you can show to them that you meet the HMRC criteria to qualify as a disabled person for the purpose of the relief.

McAzrael

Full details, and instructions on the necessary declaration, are here: http://www.hmrc.gov.uk/vat/sectors/builders/disabled.htm

Keep this link for your builder. The rules change every so often, so even if they are familiar with the allowance they may not be familiar with the latest rules. Last time we did one of these jobs our customer had certificates from the local authority - and this wasn't all that long ago.

Katykat

Thanks folks. I have asked my builder about it and he said the zero rating doesn't apply to his labour, only to the materials. He said I would have to take delivery of the materials he orders in my name, pay the bill and then claim the VAT back. I have already paid for some goods from B&Q, one receipt has the VAT separate and another one doesn't. The link that McAzrael posted suggests that even the labour can be zero rated. However, when I was drawing the plans up, I read that my LA waives the fee for registered disabled. however, when I went in to enquire, they said they no longer issue registered disabled cards and I need to get a letter from my Dr stating that the shower room is purely for my own use due to my disability. I let this one go because in all honesty, there wont only be me using it. So I paid the planning fees. however, the VAT is a large amount, so I feel I want to persue it. Has my builder got his advice right? If so, what documentation does the VAT man need in order for me to claim VAT back? I've seen the declaration form in the above link and it seems like all I have to do is fill it in, saying what my problems are, but that seems too simple. I do have a medical report, but it is very indepth and there are personal details in it that I dont really want my builder or the VAT man to see.

00ec25

Katykat wrote: »

. Has my builder got his advice right?

It would seem your builder has decided he is not prepared to risk it in your case and so has made up part of the story.
The onus is on the builder to check your status before he can apply zero rating - your builder has avoided this by removing himself form the supply chain for the materials as you are buying them in your name and they are delivered to your site. The builder is then out of it and to furtehr cover himself has "refused" to zero rate his labour so that he is not liable if it is wrong. Presumably he will eventually present you with a bill for labour + VAT, therefore you need to negotiate with him to change his mind before it is too late.

alternatively there is a (tiny) chance the builder is not (yet) over the VAT threshold and actually does not have to charge VAT...

McAzrael

Here's the HMRC page on the supply of goods: http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_PublicNoticesAndInfoSheets&propertyType=document&columns=1&id=HMCE_CL_000184#P53_4013 It starts in Section 2.4, and is quite a short list. In particular, it doesn't include building materials so B&Q (or any other retailer or merchant) would not be able to zero rate the goods.

If your builder is not VAT registered then he won't charge you any VAT, but nor will he be able to claim any VAT paid on his purchases (from B&Q or anywhere else) and so this will be in his price. In short, if he isn't VAT registered then you will be paying VAT on the materials (the long way round) but not on his labour whether you are disabled or not and whether or not the works are related to your disablility. It's a small concession to (very) small businesses to give them a bit of a competitive leg-up.

If your builder is VAT registered, then subject to the conditions in the link in my first post he is able to zero-rate the whole bill - materials and labour. He will be able to claim input tax for the VAT paid on the materials (the supply to you is zero-rated and not VAT exempt - it's an important difference). However, he would quite reasonably 'mark-up' the materials and make a profit; he is, after all, using his knowledge and reputation to obtain the goods, his time to sort things, he is taking on various risks, etc. You may not be any better off. He may have a discount (it doesn't sound like he does) - again it will be his reputation which gets this discount and so he is quite entitled to it. He may or may not choose to share it with you.

I think that the important thing, as with any building work, is to be clear before any order is placed or any work starts what is to be done and how much will be paid for it. In your case this may take a little longer to sort as the VAT implications are digested by the various parties. It's well worth taking the time to get things off to a good start.