VAT on Self Build

[everylittle]

Hubby has quoted for some groundworks for a house that is being built by its owner. As hubby is VAT registered he added in onto the quote, but the chap said 'you can't include VAT. cos its a self build...' I know that VAT can be claimed back on a self build but is he right?

[sddsddean]

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageExcise_ShowContent&id=HMCE_CL_000150&propertyType=document#P38_2420

Read 2.1 and 2.2. I'm self employed as well, but don't profess to know the ins and outs of VAT, so check with your accountant, but I think those 2 paragraphs mean that your hubby should charge VAT (as he is VAT registered) and it is down to the other guy to fill in all the forms etc and reclaim the VAT. Before I looked at this page, that was my first instinct as well, so its probably right, but check with you accountant.

[pedderwo]

The self builder can either pay the VAT and reclaim it or the contractor can Invoice - VAT zero rated.

[everylittle]

Pedderwo - Zero rated on materials and labour if we invoice? (Our accountant's on hols til Mon) Surely if we do it zero rated we could also slip a few more in like this?? What proof do we need for the VAT man?

[buildersmate]

I'm afraid Pedderwo is misinformed. VAT cannot be reclaimed by self-builders IF it was charged in error. I should know because I am coming to the end of a self-build. A VAT-registered builder or sub-contractor should not charge VAT for their work on the building, or for the materials they supply as part of their work. This is why your husband's client is querying it. Self-builders who BUY their own materials pay VAT on those materials and then claim it back. A few of my contractors have wanted to have copies of my Planning Permission approval document to go with their own accounting records as 'evidence' as to why they did not charge VAT on my contract with them.

[everylittle]

Thanks Buildersmate, hope you're still there....just one more thing: it's not actually work on the house but a 'dropped kerb' in the pavement.....does that still count?

[buildersmate]

The rule is that self-builders can claim exemption on articles or services used in the course of construction of the new dwelling. Here is a quote from the C&E website: -

" ..to produce works that allow the building to be used � as well as the fabric of the building, this would include works such as drainage, main paths on the site, driveways, retaining walls, and boundary walls and fences. Examples of works that do not qualify include:
outdoor leisure facilities such as tennis courts and swimming pools; fish ponds, rockeries and other ornamental works; and works outside the site of the building."

Because of this final sentence, I think therefore the answer is 'no', because a dropped kerb is usually between the carriageway and the path, both of which are part of the public highway and not part of the building site. Unless there is no path and the kerb is on the perimeter of the site. HTH. The VAT rules for self-builders are known by C&E as 'Notice 719' by the way.

[pedderwo]

Sorry for the mis info I thought that this was the case when a family member did a self build.

[sddsddean]

Well there you go BM. Seems I was wrong, but you would think this is a mega loop hole for some 'dodgy' people wouldn't you. I wonder if it gets abused much.