Who reclaims the VAT? Odd scenario

[Jonathan1969]

I am after some VAT guidance please

 

It's a odd scenario

 

A builder has a plot - now split into two plots and is building a house on each.  We have purchased one plot and are engaging the builder to build a house for us on it. The builder is building a house on the second plot which he will see as a completed house.

 

I assume both builds - completely new houses - will be free of VAT

 

I also assume on the second plot, the builder will build the house, reclaim the VAT and sell the house

 

With regard to our plot.  Can the builder build the plot and reclaim the vat himself?  (We are paying him a fixed fee).  Or does the fixed fee we pay him attract VAT and we then reclaim the VAT?

 

My concern is that, say the build costs him 200k plus VAT and he charges us £250k plus VAT ..... can we reclaim the VAT on the £250k or only on the £200k??

 

Any thoughts appreciated

[IanR]

The builder must charge you 0% VAT on his work and on the goods he supplies/installs on your build. (He'll be able to recover the VAT on the goods he purchases for your build)

If you get anyone else to work on your build, and that work is covered by the planning permission, then they must also zero rate the labour and goods supplied.

 

If you buy any qualifying goods for your build and install yourself or by someone else charging labour only, you can recover the 20% VAT you have paid, at the end of your build.

[Temp]

Is the CIL implemented in your area? Has he started any work on site?

 

It's possible you may have to pay the CIL on your plot even if you would normally qualify for the self build exemption. That's because him starting triggers the CIL on both unless he applied for a phased development. This might be true even if you submit a new planning application  for your plot.

 

Its quite possible people on this forum  understand this issue more than the builder or even your solicitor as they may never have heard of or encountered this issue before.

 

[newhome]

Your builder must be VAT registered and bill you at zero rated VAT so there is no VAT for you to claim yourself. You can reclaim VAT on eligible materials that you purchase yourself on a supply only basis, even if it’s just a handful of things. If your builder is building a house to sell then he can’t ‘reclaim’ the VAT using the DIY house builders’ scheme as that is for self builders who have built a house to live in, not for developers. Your builder can however use his VAT registered company to apply zero rating via his VAT returns, and also to invoice you with zero rated VAT.