Most of our clients are private homeowners carrying out residential property developments to their own homes. This means that many of the clients we work with are not always fully aware of the rather confusing and complicated rules around VAT for building projects.
It’s a little known fact, beyond those in the tax and construction industry, that there are reduced rates for VAT on some building developments. Most people know about the zero VAT rate for new builds, but there are also reductions for many other situations.
We were recently appointed to support clients with an adaptation building project. Our clients approached us via their solicitors, MW Solicitors, with whom we have worked on adaptation projects before. We were brought in to appoint the contractor, and draw up the building contracts, and then to carry out monthly valuation visits together with ongoing guidance and support for the client and build team.
Our client’s property was empty when they bought it and required some renovation works, as well as some adaptive alterations and additions including a hydrotherapy pool, to make the home more accessible to our clients, whose son uses a wheelchair. Disability adaptation works can mean reduced VAT, a situation of which our client was aware. However Charlie Laing, our Operations Director overhead a comment that suggested the house had been empty for a long time. Further investigations demonstrated that this was over two years, meaning that the project was also eligible for reduced rate VAT due to being unoccupied.
We put our clients in touch with Gerry Myton at Harwood Hutton, a firm of VAT advisors, to help our client establish what their taxation liabilities would be. Harwood Hutton then helped them to gather the right supportive information to ensure they were able to benefit from the correct VAT rates.
“We were referred to the project by Charlie Laing at CLPM who had noted that the property had been vacant for some time. We worked with the owner/CLPM and established from the local council that the property had been empty for just over 2 years. Not only did the alertness of CLPM to the 2 year period result in the VAT on refurbishment costs being reduced from 20% to 5% but when we undertook a review of costs, we were able to achieve zero-rating on some works under the disabled person VAT reliefs. An excellent example of project managers and VAT consultants working together to drive down the build cost for our now mutual client! ” Gerry Myton, Indirect Taxation Partner, Harwood Hutton
This case study highlights some of the less well known benefits of involving construction professionals in your build. In this case our knowledge of the financial aspects of construction, and our links with contacts within the taxation industry meant our clients saved thousands of pounds in VAT on their project.
If you are planning a residential property development and are interested in finding out how we can help then do get in touch.
Call 01923 896550, email firstname.lastname@example.org or complete a contact form.