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Residential Development
WHO CAN BENEFIT? House builders Building contractors Private individuals Overseas investors Housing associations Educational establishments Hostels Nursing homes Residential landlords  SOLUTIONSConsultancy Compliance Apportionments HM Revenue and Customs SPECIALIST AREAS Planning consent advice - listed buildings, conversions, renovations VAT efficient project procurement Building contract VAT advice Comparative building cost analyses EG new build v refurb Project specification VAT audit Live work units Conversions and renovations VAT refunds for DIY builders and converters Certification rules CASE STUDY A private individual purchased a derelict building for £250,000 with a view to converting it to a new dwelling. This person has worked in the construction industry and has good contacts with various suppliers and contractors and will be project managing the works themselves. They spend £50,000 on consultants fees, £300,000 on sub contractors and £200,000 on materials. The potential VAT cost on the construction works is £96,250. This will be payable in full if no consideration is given to the VAT position. By virtue of the VAT legislation that applies to the creation of new dwellings this VAT cost could be reduced to a very low level but only if early advice was taken to arrange matters in a VAT efficient manner. Even with advice at the completion date around £75,000 of the VAT would be reclaimable. However if no consideration was given until a year after completion the VAT reclaim would be much more difficult and be limited to around £50,000. Consideration of issues such as the planning application, project procurement methods and the DIY builders VAT refund scheme will all have an impact. Landmark PT aims to minimise the VAT costs by early planning advice and where appropriate agreement with HM Revenue and Customs to provide certainty to all concerned It is worth remembering that it is the building contractor as the unpaid tax collector for the government is responsible for the VAT liability on construction works and therefore guidance should always be acceptable to the builder who faces the risk of future clawbacks of VAT and penalties if the VAT position is assessed to be incorrect at a later date. |
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