Scottish Field

VAT will do nicely

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Remember that VAT can be claimed back. Those lovely people at HMRC can’t wait to give it back to you, as long as you ask nicely – by filling in the forms correctly and having all the paperwork in order. You might want to hire a specialist to help.

You qualify for a zero-rated build IF...

• you build a new dwelling or purchase a shell and bring the new build to completion.

• You or a family member intends to live there.

• The building has no planning restrictio­ns with regards to disposal later on; or used in connection with another existing property and may not be used as a business, sold, rented out or leased.

• You convert a previously nonresiden­tial property into a dwelling or a dwelling that has been empty for 10 years or more (you would need a paper trail to prove this).

• Reduced VAT rate at source – if any VAT registered business should supply labour, or labour and materials, to the job you should pay the reduced rate of five per cent VAT.

• VAT reclaim – on completion of the build, VAT paid on qualifying materials purchased at 20%

VAT can be reclaimed along with any 5% invoices.

If you pay the wrong rate of VAT to a contractor for supplying fitting or labouring this cannot be reclaimed from HMRC, irrespecti­ve of the fact HMRC has already received the

VAT from the contractor.

You will achieve zero rating VAT in two ways, or a combinatio­n of both.

• Zero rating at source: if any VAT registered business comes and supplies labour or labour and materials to the job, you should not pay that company any VAT at all. • VAT reclaim: on completion of the build, VAT can be reclaimed from HMRC.

Remember that organisati­on is the key: spreadshee­ts are your friends and make sure all paperwork is kept safely for when the time comes to fill in the dreaded form 431NB to claim a VAT refund on a new build, or 431C to claim for a conversion.

You must claim within three months of the building work being completed and you must include all the documents listed in the claim form as part of your applicatio­n.

If an invoice is in your business’ name, you’ll need proof that you’ve refunded the amount from your personal bank – for example, a bank statement.

VAT invoices must be valid and show the correct rate of VAT or they will not be accepted.

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