110v versus 240v at start of project

[Drellingore]

Hi all, questions at the top, context below!

 

1. Should I buy power tools rather than rent them?
2. Should I be buying 110v power tools at the start of a self-build project?

 

My immediate task is that I need to break through a big stone slab whilst digging a 2m water table test pit. I was going to go and buy a concrete breaker to get through the slab (I managed to get through it in one place with a pickaxe, which was a bit of a mission in a 1x1m pit!). Yes, I should probably have used a digger or something, but at the time I fancied the physical challenge of doing it by hand

Our planning application is in, and we've set up a special purpose vehicle limited company to run the build project. It's a barn conversion, so should be VAT zero-rated. I'm thinking it makes sense for the company to buy all the tools as-and-when we need them, so that it can claim the VAT back. 

 

On the 110/240v thing, it seems safer to be using 110v, and I'd rather be on the safe side of things - it'll be me who gets electrocuted, and I'll be legally responsible! I'm thinking that getting 110v kit means that it'll be easier to use if we want to get stuck in when it's a proper building site. For example, it'd be a bit weird if all the trades are using nice, safe, 110v kit and then I as the owner/customer wade into things with 240v equipment.

 

Any thoughts or suggestions? Is 110v gear generally better as it's more oriented toward the professional?

[PeterW]

11 minutes ago, Drellingore said:

Our planning application is in, and we've set up a special purpose vehicle limited company to run the build project. It's a barn conversion, so should be VAT zero-rated. I'm thinking it makes sense for the company to buy all the tools as-and-when we need them, so that it can claim the VAT back. 

Limited Company ..?? Hope you’ve had good tax advice as that’s not ideal when it comes to single builds as there are other liabilities. 
 

No real benefit buying 110v if it’s a single build - you’re not going to get the resale value when you finish the build and sell them anyway 

[Drellingore]

1 minute ago, PeterW said:

Hope you’ve had good tax advice as that’s not ideal when it comes to single builds as there are other liabilities

 

My accountant's been pretty good so far, and has stewarded me through four businesses and one large company sale. This SPV will just be for the design-and-build, it won't actually own the land or anything. It also allows us to make an inter-company loan from my holding company to the SPV, so I can use those funds to avoid the need for bridging loans or traditional finance. Was there anything in particular you had in mind that I should check for?

 

1 minute ago, PeterW said:

you’re not going to get the resale value

 

Ah, are they harder to sell on? I can imagine that there's a smaller market, and that professionals probably buy new.

[PeterW]

11 minutes ago, Drellingore said:

This SPV will just be for the design-and-build, it won't actually own the land or anything.

So you are your own main contractor ..?? And if it’s not owning the building, are you planning on buying the finished build personally from the company at the end ..??

[Drellingore]

3 minutes ago, PeterW said:

So you are your own main contractor ..?? And if it’s not owning the building, are you planning on buying the finished build personally from the company at the end ..??

 

Sort-of on the main contractor front. We'll appoint someone that actually knows what they're doing to build stuff, but they'll be appointed by the SPV.

Yes to the second question.

[Conor]

90% of your tools will be battery powered. Only mains powered items I have are a 9" grinder, 6kg kango and table saw. 

 

Safety wise, if you have a prerly earthed and RCBDO supply, then Therese not much in it. Industry goes for 110v on assumption that you won't have these in place 

[PeterW]

19 minutes ago, Drellingore said:

Sort-of on the main contractor front. We'll appoint someone that actually knows what they're doing to build stuff, but they'll be appointed by the SPV.

So you’re liable for all the CDM elements that a domestic client can pass off - what insurances has the company got in place ..??

Don’t forget that the subs won’t be zero rating as you’re contracting as a VAT registered entity - it’s only the end client that gets the benefit of zero so your cash flow will be VAT inclusive. 

[Drellingore]

24 minutes ago, PeterW said:

So you’re liable for all the CDM elements that a domestic client can pass off - what insurances has the company got in place ..??

 

Yep. No insurance in-place yet (no work has really started), but I expect we'll need to get some sorted. I've run businesses with employees and public premises before, so I'm hoping it won't be much harder than reading the HSE documentation, paying for insurance, and then keeping a risk register.

 

24 minutes ago, PeterW said:

Don’t forget that the subs won’t be zero rating as you’re contracting as a VAT registered entity - it’s only the end client that gets the benefit of zero so your cash flow will be VAT inclusive. 

 

Thanks, but I don't believe that to be true. Section 2.1.3 of VAT Notice 708 says:
 

Quote

Subcontractors are contractors who work to other contractors. For the most part they can zero rate or reduce rate their supplies according to the building being constructed or worked on, as described at paragraph 2.1.

 

Edited January 3, 2023 by Drellingore
adding link

[PeterW]

5 minutes ago, Drellingore said:

Thanks, but I don't believe that to be true. Section 2.1.3 of VAT Notice 708 says:

You need to read 7.1 and section 7 as you are doing a conversion so the 5% rate refers not zero rated. Zero only applies to subcontractors when the full rate is exempted.

 

7 minutes ago, Drellingore said:

I've run businesses with employees and public premises before, so I'm hoping it won't be much harder than reading the HSE documentation, paying for insurance, and then keeping a risk register.

you’re about as far away from the truth on CDM as it can get - CDM2015 is onerous to the n’th degree and is not just some paperwork. It starts with Principal Designer and works through from there - it’s one of the key benefits of not using VAT registered companies to do conversions and residential self builds.

 

This is the start point :

 

https://www.hse.gov.uk/construction/cdm/2015/index.htm

 

For the whole of the construction phase you will require a Construction Phase Plan, and HSE may request it at any time.

 

 

 

 

 

[Mr Punter]

I have a ltd company doing new build property.  We are caught by CDM and CIS taxation, as well as regular VAT returns (which are normally reclaims.  We have Contractors All Risk insurance.

 

If you want mains power tools you may be better with 230v so you don't need to schlep the transformer.  Battery tools are fine for most jobs.

[Drellingore]

6 minutes ago, PeterW said:

You need to read 7.1 and section 7 as you are doing a conversion so the 5% rate refers not zero rated. Zero only applies to subcontractors when the full rate is exempted.

 

Section 5 suggests that it's zero-rated, as it's conversion from a non-residential property to a dwelling. It's surprising how complicated the official guidance is, especially when different scenarios are spread out across the document!

 

9 minutes ago, PeterW said:

you’re about as far away from the truth on CDM as it can get - CDM2015 is onerous to the n’th degree and is not just some paperwork

 

Eep! Thanks for the heads-up, I should probably start looking into that then.

[nod]

I’ve not read the answers 

But first I would say a Ltd company is a terrible idea 

I can’t see any benefits in doing do 

Ive run a Ltd company for over 30 years and on our previous build and this The first job was to open parallel accounts With the nine accounts I already have To distance myself from being classed as a building contractor 

and the inevitable corporation tax that will follow 

I wouldn’t even get vat registered 

 

All site trades will have batteries or 110 

I can’t remember seeing 240 onsite for over 20 years 

 

 

[Roys]

Not much 110V on sites now, even vacuum cleaners are mostly battery, sds drills fairly much battery from about 5 years ago, drills and impact drivers have been battery for a long time,  as said above the only 110V stuff you tend to see now is big chop and table saws and demolition type Kangos..

[saveasteading]

1 hour ago, nod said:

I’ve not read the answers 

I have skimmed, and agree with most points.

 

1.   Don't try to be too clever, as VAT is horribly complex.

Don't assume your accountant understands it...there are special advisers who charge an awful lot for their VAT advice. I have sat with them (for a probably zero VAT client) and realised that sometimes the VAT people don't know either.

You can't choose to be a business, then not a business. An individual but also a company. VAT rebates only apply for domestic conversions, with zero business connection.

If you avoid tax inappropriately (evasion ) then you will be penalised (severely fined) as well as have to pay whatever is deemed appropriate.

Then they will send other inspectors to examine everything else.

It is so complex that I will not give more advice on this. Get advice, read all the documents yourself and then get more advice. If the accountant doesn't agree to be liable for any liability then make your own mind up.

 

 

 

2.  For breaking out a slab, hire a good breaker: one of these

They seem too lightweight and quiet, but they exude breaking power rather than noise and vibration.

 

3. Drills, saws, cement mixers..buy good ones. 240V. you can have an RCD to keep you safe. 

 

 

4.  CDM isn't a game. People die and are injured far less than in the past. This is due to expectations and Human Rights, but also through the rigour of thinking through safety, and formalising it.

 

 

 

[Russell griffiths]

Regarding tools, the only tool on site that is mains powered is a table saw, 99.9% of everything I own is battery powered. 

Regarding the breaker, just go and hire one for a day. 

[saveasteading]

3 minutes ago, Russell griffiths said:

battery powered. 

Quite right. Choose a good make and the batteries can be used on most.

We bought mains power for cement mixer, table saw and chop saw. The rest is battery.

[Nickfromwales]

8 minutes ago, saveasteading said:

CDM isn't a game. People die and are injured far less than in the past. This is due to expectations and Human Rights, but also through the rigour of thinking through safety, and formalising it.

So many self builders just look at this as "something the big boys have to do", but the onus is absolutely on them. Preventing someones death, ( which includes that of a 5 year old child you've never met or ever even seen before, who has found a loose fence panel to wander through and then falls to their death on YOUR private property ) is on YOUR head, and no other. Some scary shit I kid you not.

A lot of the self proclaimed self builders I meet seem to think project management is;

• go to Screwfix, buy hi-vis and hard-hat, job done
• order skips
• make phone calls to find folk to do the work
• stay up late every night trying to beat the prices they gave them, whilst failing to cost / get the correct stuff, and pissing these people off at the same time when they turn up and cant work that day
• ask pissed off people to go get the right stuff, which now has cost you 160% of what the original cost would have been.
• choose colours for pretty things 
• celebrate when you bring the job in; on time, on budget, or not.........

 

@Drellingore

Hi, and welcome to the forum. Strap yourself in, as you will get straight talking from folk here who have done this, got the T shirt, and who also got things wrong but were selfless enough to document their journeys ( warts and all ) for folk like yourself to benefit from.

I think you are nuts starting this company, and you are very unsure of your actual VAT status. FYI, an accountant is not the best font of knowledge in this respect, so maybe defer to the services of "The VAT man", a paid online consultant who will give you the facts. Others may be available, this is the only one I've heard feedback from.

 

110v or 230v, matters not a single jot  If the 230v supplies are from a certified source with a proven ( tested ) earth protected circuit, then you can use either perfectly acceptably and safely. I always install a 110v transformer and 110v festoon lighting for each of my projects, from start to finish, but zero other 110v items are necessary. 230v will always be required, as trades will need several outlets to plug all their chargers into.

 

Hope this helps. 

[saveasteading]

50 minutes ago, Nickfromwales said:

110v or 230v, matters not a single jot

As a contractor, we always used 110V. It was normal and expected. 

It was a problem on big projects as the voltage dropped a lot with distance, and the electricicles barely dribbled into the power-drills.

I think the main safety issue was with multiple trailing leads getting damaged and wet.

 

On a private project and any diy we use 230V.   because of any socket, machines are cheaper, less risk of cable damage as not subbies everywhere.

 

Back to VAT.

I have done several zero rated projects. Most were private schools who were not vat registered but had an associated business they could use. Whether they always 'got away with it' I can't be sure. But most simply accpeted that they couldn't have it both ways...if they didn't want to charge vat on school fees, they couldn't claim it back on projects either. It was always a big decision and I did not advise.

Similarly for a nursing home. Our client too advice, and paid handsomely for it. The company even indemnified our client in case tax was deemed due..imagine the cost of that cover.

In all these cases we had to charge zero VAT which is very bad for cash-flow.

And in all these, we made it contractual that the client would pay us all vat due if it was deemed required retrospectively.

 

My moral: It is complex. Any cute ideas will have been tried already. Being too cute will cost you the tax plus a big fine.

And don't bother asking the vat office to advise...they don't, and leave all the risk with you.

 

1 hour ago, Nickfromwales said:

you will get straight talking from folk here who have done this,

Apologies now and for all future bluntness. The anonymity helps.

If this was my job I would write and rewrite and include softening statements and niceties. But it is spare time, not necessarily reading your question properly, and without further research.

 

Looking forward to following your project...and asking IT questions.

 

 

Oh another bit of bluntness.

Having a company to claim the vat back on tools is not a priority. What will they cost . £3,000??  VAT £600.

You will waste  or save £600 many times over in other ways. 5m3 of concrete for example.

 

 

 

 

 

[nod]

2 hours ago, saveasteading said:

I have skimmed, and agree with most points.

 

1.   Don't try to be too clever, as VAT is horribly complex.

Don't assume your accountant understands it...there are special advisers who charge an awful lot for their VAT advice. I have sat with them (for a probably zero VAT client) and realised that sometimes the VAT people don't know either.

You can't choose to be a business, then not a business. An individual but also a company. VAT rebates only apply for domestic conversions, with zero business connection.

If you avoid tax inappropriately (evasion ) then you will be penalised (severely fined) as well as have to pay whatever is deemed appropriate.

Then they will send other inspectors to examine everything else.

It is so complex that I will not give more advice on this. Get advice, read all the documents yourself and then get more advice. If the accountant doesn't agree to be liable for any liability then make your own mind up.

 

 

 

2.  For breaking out a slab, hire a good breaker: one of these

They seem too lightweight and quiet, but they exude breaking power rather than noise and vibration.

 

3. Drills, saws, cement mixers..buy good ones. 240V. you can have an RCD to keep you safe. 

 

 

4.  CDM isn't a game. People die and are injured far less than in the past. This is due to expectations and Human Rights, but also through the rigour of thinking through safety, and formalising it.

 

 

 

240 on site is stupid advise Relying on RCD whilst mowing your lawn is ok

You wonder why 100 % of commercial and housing sites banned 240 v years ago 

Some won’t even have generators or leads on site now Batterie only 

[Mattg4321]

There’s a big safety difference between 110v tools from an isolating centre tapped site transformer and 230v tools, often from a PME supply. 
 

That said, most small sites use 230v only (where not cordless) as it’s much more convenient not lugging the transformer around. If on a suitable supply with RCD then it’s acceptable as long as no significant ground works/outside works imo. 

[Nickfromwales]

5 hours ago, nod said:

240 on site is stupid advise Relying on RCD whilst mowing your lawn is ok

You wonder why 100 % of commercial and housing sites banned 240 v years ago 

Some won’t even have generators or leads on site now Batterie only 

Every UK home with a modern electrical system has 230v + RCD,  which is good enough for all occupants to run / hold corded appliances etc every day for their whole life, not just the short duration of a build. Trades know better too, so should be responsible for their own safety ( not using damaged leads / keeping power and water separate etc ), and 230v will just become more popular on site as the extended range of peoples battery tools keeps getting added to and the line of chargers keeps getting longer.

 

Welcome to 2023 big G  

[andyscotland]

I'm also very curious (sceptical) on the ltd company question. Do you have a fully worked model of all the costs and benefits of that approach?

 

As far as I know if you're in control of the company it would need to be charging you on an "arms length" basis to avoid HMRC "looking through" transactions. For example, you can only be VAT registered for the purpose of "trade", if HMRC were to decide transactions were not for trade they could block any input tax recovery.

 

I'd have thought by the time the company has paid taxes on a believable value of capital gains/profits, and you've paid stamp duty on buying the finished property out of the company (which you said earlier was your plan) again at a fair market value that's going to add up to a pretty hefty sum.

 

The other worry would be that it is very common for self builds to go over budget, do you definitely have a mechanism to borrow a decent amount of additional finance if needed? I can imagine getting e.g. a mortgage would be challenging if the ownership structure is unusual.

 

In my experience "cunning plans" have worked out to be profitable for the professional advisers that come up with and administer them and marginal at best for the clients. I have also seen cases where an inquiry into one client has led HMRC back to the adviser and then to their other historic clients, so the risk is higher than e.g. if you chose to interpret the rules "flexibly" off your own back. There is also a big difference between "unintentional" and "intentional/should have known better" penalty charges.

 

My gut feel is that if this was a good way to make a big saving everyone would be doing it, and they are not. But please correct if we're wrong and missing a trick!

 

On your actual question, I'd agree batteries for basically everything, 240v (off a proper supply with RCD protection) where necessary, make sure you are using IP rated sockets or preferably weatherproof CEE connectors ("commando plugs") in any area that is not fully watertight.

Edited January 4, 2023 by andyscotland

[nod]

9 hours ago, Nickfromwales said:

Every UK home with a modern electrical system has 230v + RCD,  which is good enough for all occupants to run / hold corded appliances etc every day for their whole life, not just the short duration of a build. Trades know better too, so should be responsible for their own safety ( not using damaged leads / keeping power and water separate etc ), and 230v will just become more popular on site as the extended range of peoples battery tools keeps getting added to and the line of chargers keeps getting longer.

 

Welcome to 2023 big G strange why sites won’t allow 240 😂

[andyscotland]

My past experience is event / festival sites where everything is run in a mix of 240v and 415v. The risk profile of an outdoor event site - especially during build and strike - is probably not that different to big construction. That said absolutely everything was on a commando plug until the very final socket (which was usually a single commando - 13a adaptor for a specific piece of kit).

 

So imho 110v definitely has safety benefits but it is possible to make higher voltages work safely with sensible controls in place. If you have 240 on site for chargers then unless you police it there's a fair risk someone turns up with a 240v tool in their van and runs an extension lead(s) for it which IMO would be worse than having a safe 240 supply around the site.

Edited January 4, 2023 by andyscotland

[SteamyTea]

The way I understand it, it is not the voltage that is the issue, it is the isolation.

110V on site uses isolating transformers, there is no reason why it could not be a 230V isolating transformer.  These have no physical connection between the primary and secondary windings.

So if you touch either the nominal live, or neutral wires, they become grounded and at 0V (or very close to it), this zeros the power as power is VA.

Just don't touch both at the same time.

Edited January 4, 2023 by SteamyTea