DIY Scheme - vat & cis on a part qualifying live/work unit bill

[Beck]

Hi, I've got myself thoroughly confused so hoping someone can help. 

I'm 'helping' my partner with his self build, from a totally demolished site so new. The build is ground floor storage for his business so doesn't qualify to get vat back under DIY Scheme. Upper floor is a small flat, tied to a worker in the business though. 

Here's the tricky bit - to speed things up and make a start before the June regs exemption ended, my father's business was brought in to do groundworks. They're CIS reg and use a subcontractor. I need to do a bill from this business to my partner (probably not his business at this point as surely the foundations count towards the upper floor?!) with both parts and with CIS labour on...what do I put for vat rates please?! We have no idea what HMRC will do about paying part (literally half of all, or only things clearly for the upper floor?) as they wouldn't answer the DIY Team phone and now the vat line has closed I'd guess that's why. 

Basically, trying to find out how the bill should look so that hopefully he can one day reclaim half, how does it interact with CIS if at all, and any advice on reclaiming on live/work units that might be going. 

Any help very appreciated, although he's done many a site, that's no longer the main line of work for the business billing - hence why it's all new to me. 

Just to note, partner being billed is not CIS reg, as individual or company. 

[Conor]

He can only reclaim VAT on materials, sourced and paid for by himslef, for a residential new build, as an individual, not a business. Sounds like you are describing a service? In that case the works pertaining to the new build residence should be zero rated, if it qualifies, I'm not sure on that aspect and I think it's more of a core HMRC question rather than the DIY recliam scheme. Is the residential unit described as a separate unit (own access, services etc) on the planning application?

Edited June 23, 2023 by Conor

[Temp]

+1

 

Any labour and materials your father's business does on the residential part of the building should be zero rated to your partner.

 

I believe when your father does his VAT return he can deduct VAT he's paid on materials for the residential part of the building from the VAT he charges your partner on the business part of the property (or any other VAT he charges other customers).

 

I'm afraid I'm not sure what fraction of the foundations (if any)  can be attributed to the residential part.

 

Any VAT your partner pays on materials given to contractors to fit in the residential part (for example a bath or WC)  can be reclaimed from HMRC provided your partner plans to live in it.

 

 

Edited June 23, 2023 by Temp

[Beck]

Thanks both, it's a tricky one, especially with the helpline ending!

[Temp]

1 hour ago, Beck said:

Thanks both, it's a tricky one, especially with the helpline ending!

 

There is a VAT forum which appears to have some HMRC staff on it..

 

https://community.hmrc.gov.uk/customerforums/vat