VAT & Zero Rating for New Building Works.

stone7

A family have hired the services of a local building company to do some modifications to their home. The building company has then hired me to build a NEW gatepost along with restoring an old original gatepost. The builder man has asked that I zero rate the VAT for the new gatepost and bill the normal 20% on the restored one on the basis that NEW building works are exempted from VAT for occupied family dwellings.

Is this OK?

molerat

No. This is not new building works, you said so in your opening sentence.

http://www.hmrc.gov.uk/vat/sectors/builders/construction.htm

antrobus

stone7 wrote: »

..
Is this OK?

I suspect not.

The HMRC page on Building and construction work and VAT is here:-
https://www.hmrc.gov.uk/vat/sectors/builders/construction.htm

I'd hazard a guess that supplying a new gatepost to an existing building is standard rated.

JasonLVC

stone7 wrote: »

A family have hired the services of a local building company to do some modifications to their home. The building company has then hired me to build a NEW gatepost along with restoring an old original gatepost. The builder man has asked that I zero rate the VAT for the new gatepost and bill the normal 20% on the restored one on the basis that NEW building works are exempted from VAT for occupied family dwellings.

Is this OK?

As others have posted, what you describe sounds wrong and the liability for getting it right is you, not the main contractor or end customer. HMRC will penailse you if you get it wrong.

The zero rate only applies to the construction of a new dwelling (ie, a new house/apartment) where there wasn't one there before. If you were doing the gateposts as part of an entire new build then yes, you could zero rate your works.

As there is already a dwelling there and people living in it then it cannot be brand new/unoccupied, so then your works are not in relation to a new dwelling and so will be standard rated. If general repairs could be zero rated, then why do double glazing salesmen, always quote VAT (isn't a replacement window the same as a replacement gatepost?)

If the gatepost was somehow connected to a grade listed building you could zero rate the work that relates to the approved planning consent for that gatepost but the making good of the non-grade listed post would still be at the standard rate. This scenario is highly unlikely.

The building company clearly have no idea about how VAT works, let them zero rate their supply to the customer if they want to, you can charge them VAT. As you are charging VAT to another VAT registered (I assume) builder then the builder can reclaim the VAT you charge him anyway so not loss to him at all.

FatAndy

"What is a new construction?

You're only considered to be building a new house or flat if it's genuinely new. This means that if there was an existing building on the site it must have been demolished completely to ground level. You can leave any cellars, basements and the slab.

Sometimes you may be able to zero-rate work that you carry out on an existing building if it's either:

• a listed building
• a scheduled monument "

http://www.hmrc.gov.uk/vat/sectors/builders/new-houses.htm#3

So unless it's a listed building it's vatable.