Conversion at 5% VAT HMRC letter?

[ashthekid]

My contractor has left my project half way through the build on my conversion project from a commercial property into a residential dwelling.

upon his invoicing until he left he charged me the correct 5% that I was told by a VAT specialist who I was recommended from one of the popular housebuilding magazines.

 

However now I have taken over the project directly myself and am getting conflicting responses from companies, some will allow me to be charged 5% by them and some are saying no, they must either charge the full 20% and I do the reclaim myself at the end of the project or they are saying for me to provide proof from the HMRC that my project should be charged at the 5% rate.

 

How do I get this letter? It would save me a lot of hassle and admin at the end of the project for a lot of the work taking place.

And also I keep hearing these horror stories of people being unsuccessful in their claim at the end with HMRC.

[Faz]

Did a conversion of a 50,000 sq. ft. office to resi a few years back. Had the same issue - some at 5% others insisting on 20%. Wasn't so much of a problem for us as we recovered VAT monthly on our returns.

 

Showing the contractors the planning consent really should do the trick but many don't understand / don't want to take the risk.  Try reaching out the HMRC who sometimes can be quite helpful provided you are not on their shit list or you have the misfortune of getting hold of a prick.

[Temp]

10 hours ago, ashthekid said:

However now I have taken over the project directly myself and am getting conflicting responses from companies, some will allow me to be charged 5% by them and some are saying no, they must either charge the full 20% and I do the reclaim myself at the end of the project or they are saying for me to provide proof from the HMRC that my project should be charged at the 5% rate.

How do I get this letter?

 

Firstly they MUST charge you 5% on labor and any materials they supply (eg the electrician if he supplies wire). If they charge you 20% your claim may be rejected by HMRC. You cannot reclaim VAT incorrectly paid. HMRC can tell you to go back to the contractor for it.

 

Officially you don't need to give them a letter they should just do it. The letter is actually a certificate and you can write it yourself.  I think officially only charities need to provide a certificate but it can help smooth a problem with a contractor if you give them one. There is a template in VAT708, section 18 about certificates. You may need to reword it a bit.

 

PS: Any materials you buy in your name from a builders merchant will be charged at 20% and you can reclaim that. In some cases a contractor might be happier for you to buy materials and free issue them to him to fit. Particularly if he's not VAT registered.

 

Edited December 8, 2021 by Temp