Scottish Field

VAT will do nicely


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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