VAT 'edge cases'

[Alan Ambrose]

Can I start a thread on VAT 'edge cases' i.e. the stuff which isn't so obvious. I've a couple now:

 

1. Layout of plot outline etc by surveyor with total station - is this professional services (VAT) or just services (no VAT). Is there a hard line between one and the other?
2. I've a question re site set-up. I'm buying electrical stuff for the kiosks etc (VAT reclaimable as 'incorporated into the building') as well as bits for the site hut (not 'incorporated into the building'). I didn't think about it at the time (electrical is electrical after all) - but does this mean that people are going through their invoices re VAT reclaim line-by-line?

 

Jeez, VAT 708 is a dogs dinner.

[jack]

Someone posted about a problem claiming for a home automation system that controlled their lights. I believe it was rejected because it controlled other things that weren't allowed.

 

One way around that might be to see if the supplier will word the invoice appropriately. Or maybe the invoice could be itemised in such a way that it's clear what components solely relate to claimable items (e.g., mains dimmers). 

 

16 minutes ago, Alan Ambrose said:

... but does this mean that people are going through their invoices re VAT reclaim line-by-line?

 

We did. We regularly bought non-claimable items at the same time as claimable items, so I marked up each invoice/receipt in pencil showing how I'd removed the non-claimable item.

[kandgmitchell]

Your surveyor is "professional services" as was ours and the archaeological dig we needed. You pay the VAT and can't get it back. "Services" without VAT are the electrical, gas, drainage etc which "service" the house.

 

Like Jack we had mixed invoices and simply struck out the items which were not claimable. Ours has just been paid and they didn't raise any queries on what we included or how we presented the invoices.

[Alan Ambrose]

… so surveyors are ‘professional’ but electricians, plumbers etc are not (in the eyes of Customs & Excise)?

[Conor]

14 minutes ago, Alan Ambrose said:

… so surveyors are ‘professional’ but electricians, plumbers etc are not (in the eyes of Customs & Excise)?

The line is quite simple, a professional service provides advice, expertise, design, and reports/documentation. A contractor makes /modifies stuff. 

[Temp]

There is a list somewhere of things that you can/can't claim the VAT on. Its on the government Web site.

 

7 hours ago, Alan Ambrose said:

I've a question re site set-up. I'm buying electrical stuff for the kiosks etc (VAT reclaimable as 'incorporated into the building') as well as bits for the site hut (not 'incorporated into the building'). I didn't think about it at the time (electrical is electrical after all) - but does this mean that people are going through their invoices re VAT reclaim line-by-line?

 

If you are in Tesco buying Paint and Lunch you can't reclaim the VAT on your lunch so you cross it off and put the revised figure on your spreadsheet. Ditto consumables like sandpaper and tools.

 

I believe a cabinet to house a temporary electricity supply is not zero rated. However I've not heard of anyone being asked to prove that all the wire they purchased was actually used inside the house. 

 

There is a section in 708 which exempts things necessary to allow the construction of the house. That's intended to cover things like water main diversions or demolition.

[Alan Ambrose]

>>> The line is quite simple, a professional service provides advice, expertise, design, and reports/documentation. A contractor makes /modifies stuff. 

 

So an electrician or drainage guy doing a design for you is 'professional'.

 

The same guy installing stuff is not?

 

p.s. I'm not being argumentative, just trying to get my VAT right.

Edited Wednesday at 07:44 by Alan Ambrose

[G and J]

4 minutes ago, Alan Ambrose said:

So an electrician or drainage guy doing a design for you is 'professional'.

 

The same guy installing stuff is not?

 

As the one trying to keep track on the VAT....yes to the above so other e.g.s

 

If we had hired a digger, and then someone to drive it we would not have been able to zero rate /claim back VAT on digger, as we hired the digger and driver (supply and "fit") the whole cost could be zero rated.

 

We have had to pay haulage to get the bricks we (I!) want for the plinth, as long as it is invoiced with the bricks, the VAT can be reclaimed

 

Finally, as our frame is not being installed, just supplied, it can't be zero rated (unlike our windows) but we can reclaim the VAT.......

 

"Simples" or in fact not! J

[garrymartin]

35 minutes ago, Alan Ambrose said:

So an electrician or drainage guy doing a design for you is 'professional'.

 

The same guy installing stuff is not?

I think there is a nuance here, a little like the digger and driver scenario.

 

If Electrician 1 does a design for you, but electrician 2 installs it, only the second electrician's services are zero-rated.

 

If Electrician 1 does a design and the installation for you (under a single contract), my understanding is that the whole amount can be zero-rated - i.e. design and build, supply and fit...

[jack]

54 minutes ago, garrymartin said:

If Electrician 1 does a design for you, but electrician 2 installs it, only the second electrician's services are zero-rated.

 

If Electrician 1 does a design and the installation for you (under a single contract), my understanding is that the whole amount can be zero-rated - i.e. design and build, supply and fit...

 

While services (without supply of goods) are generally not zero-rated, labour without supply is still zero-rated as long as it is work done "in the course of construction".

 

An electrican should zero-rate installation even if they didn't supply what's being installed. This is why "demolishing existing buildings and preparing the site" (see below) is zero-rated even if no materials are supplied, but structural engineering services are not. 

 

https://www.gov.uk/vat-builders/new-homes:

 

Quote

Timing, labour and materials

 

Work that’s zero-rated for VAT must take place during the construction project, or be closely related to it (for example, demolishing existing buildings and preparing the site). This is known as work done ‘in the course of construction’.

 

You cannot zero-rate work you do after a building’s finished, apart from correcting defects in the original work (‘snagging’).

 

All labour on a qualifying building can be zero-rated, but there are special rules on what counts as building materials for VAT purposes.

 

The "in the course of construction" phrase above is a hyperlink on the website, which takes you to:

 

https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708#are-my-services-made-in-the-course-of-the-construction-of-the-building

 

Quote

3.3 Services made ‘in the course of the construction’ of the building

3.3.1 Meaning of these services

Your services are supplied ‘in the course of the construction’ when you carry out:

    - work on the building itself (including applying any usual decorative features) prior to completion of the building (read paragraph 3.3.2 and paragraph 3.3.3)
    - any other service closely connected to the construction of the building (read paragraphs 3.3.4 to 3.3.7)

 

From the same link:

 

Quote

3.3.4 Work closely connected to the construction of the building
Subject to paragraph 3.3.6, your work is closely connected to the construction of the building when it either:

(a) allows the construction of the building to take place, such as when you:

 - demolish existing buildings and structures as part of a single project to construct a new building or buildings in their place (the granting of a right to remove materials is not the supply of demolition services and is standard-rated)
 - provide or improve an access point to a building site to allow deliveries to be made
 - carry out ground works (including the levelling and drainage of land) as part of the process of constructing a new building or buildings in its place
 - provide site clearance or ‘builders’ clean’ services
 - secure the site

(b) produces works that allow the building to be used, such as works in connection with the:

 - means of providing water and power to the building (this can extend to the work required to make the connection to the nearest existing supply)
 - means of providing within the development site access to the building (for example roads, footpaths, parking areas, drives and patios)
 - means of providing security (for example walls, fences and gates but most electrical appliances are always standard-rated, further information is in paragraph 13.60
 - provision of soft landscaping within the site of a building (such as the application of topsoil, seeding with grass or laying turf)
 

The planting of shrubs, trees and flowers would not normally be seen as being ‘closely connected…’ except to the extent that it’s detailed on a landscaping scheme approved by a planning authority under the terms of a planning consent condition. This does not include the replacement of trees and shrubs that die, or become damaged or diseased.

 

It’s not possible to produce an exhaustive list of services that are closely connected to the construction of the building, and each case not included in (a) and (b) must be looked at on its own merits.

[Alan Ambrose]

OK I just paid my surveyor's invoice with VAT for laying out the dwelling on the plot. Sounds like that should have been zero VAT. Presumably, that was 'closely connected to the construction of the building'.

 

>>> It’s not possible to produce an exhaustive list of services that are closely connected to the construction of the building, and each case not included in (a) and (b) must be looked at on its own merits.

 

OK maybe I should use my own judgement then.

[G and J]

13 minutes ago, Alan Ambrose said:

OK I just paid my surveyor's invoice with VAT for laying out the dwelling on the plot. Sounds like that should have been zero VAT. Presumably, that was 'closely connected to the construction of the building

Don't think so, as could be interpreted as a fee for "professional" service, but would be interested as to what others think.

 

We paid vat on the surveyors for our party wall agreement and architects fees even though you could "try" to claim they were associated with the construction! They are definitely not claimable.

[JohnMo]

On 02/06/2025 at 14:05, Alan Ambrose said:

Layout of plot outline etc by surveyor with total station - is this professional services (VAT) or just services (no VAT). Is there a hard line between one and the other?

Our ground contractors brought that person in under his subcontract, so it just was absorbed into their fee VAT free.

 

On 02/06/2025 at 14:05, Alan Ambrose said:

I've a question re site set-up. I'm buying electrical stuff for the kiosks etc (VAT reclaimable as 'incorporated into the building') as well as bits for the site hut (not 'incorporated into the building'). I didn't think about it at the time (electrical is electrical after all) - but does this mean that people are going through their invoices re VAT reclaim line-by-line?

Just invoices I added to the pile and the vat was paid back when I claimed.

6 hours ago, Alan Ambrose said:

just trying to get my VAT right.

Just claim everything, that isn't obvious like an architect.

 

 

[jack]

1 hour ago, Alan Ambrose said:

OK I just paid my surveyor's invoice with VAT for laying out the dwelling on the plot. Sounds like that should have been zero VAT. Presumably, that was 'closely connected to the construction of the building'.

 

>>> It’s not possible to produce an exhaustive list of services that are closely connected to the construction of the building, and each case not included in (a) and (b) must be looked at on its own merits.

 

OK maybe I should use my own judgement then.

 

One way to think about whether labour is "in the course of construction" is to consider whether the result of that labour is a physical change that brings the building closer to completion. Demolition and digging foundations clearly satisfy that test, for example, as does first fix wiring even if the electrician didn't supply materials.

 

In your example, a surveyer setting out foundations does not result in a physical change in the real world. Any stakes or markers are temporary indicators of locations. That doesn't result in a physical change that brings the building closer to completetion, and hence VAT is payable. However, if you paid a surveyer to set out the foundations and to dig the trenches, and he invoiced you for both on the same invoice, that would be zero-rated.

 

49 minutes ago, G and J said:

Don't think so, as could be interpreted as a fee for "professional" service, but would be interested as to what others think.

 

Considering whether you're paying for professional services is a reasonable shorthand, but I believe it's easier to think about it in terms of construction. 

 

There are three basic principles at work:

1. An invoice solely for labour that is "in the course of construction" is zero-rated (and hence an invoice solely for labour that is not "in the course of construction" should include full VAT).

2. An invoice solely for materials is not zero-rated at source, but the VAT can be reclaimed after the building is complete. 

3. An invoice only has a single VAT rate, which is set by the lowest-rated item on the invoice.

 

As such, the whole of an invoice that includes an item for labour that is "in the course of construction" is zero-rated, even if it also include materials, hire charges, and professional services (eg, design work or engineering calculations) that would not be zero-rated if invoiced alone. Obviously these other items also need to be related to the building.

 

 

[G and J]

Out of interest why did you need a surveyor for 

9 hours ago, Alan Ambrose said:

laying out the dwelling on the plot

?

[JohnMo]

8 hours ago, G and J said:

Out of interest why did you need a surveyor for 

?

For us he came, opened computer, connected to satellite, marked out building location and every corner. Digger dug, we filled with concrete. Man came back, redid corner marking in the concrete. Everything was square, dimensions correct etc. No more than 30 mins on site each time. Makes an easy accurate job of it.

[G and J]

Goodness Im such a dinosaur.   I use a water level, tapes, strings and profiles.  

[ProDave]

2 minutes ago, G and J said:

Goodness Im such a dinosaur.   I use a water level, tapes, strings and profiles.  

I marked mine myself, by measuring with a long tape measure, and then when I had it marked out I painted a single white line on the ground marking the centre of each trench.  I then dug it lining up the centre tooth on the bucket with the line.

 

My builder said it would never be accurate, then ate his words when he found no alterations needed to the trenches before pouring concrete.

[G and J]

4 minutes ago, ProDave said:

I marked mine myself, by measuring with a long tape measure, and then when I had it marked out I painted a single white line on the ground marking the centre of each trench.  I then dug it lining up the centre tooth on the bucket with the line.

 

My builder said it would never be accurate, then ate his words when he found no alterations needed to the trenches before pouring concrete.

Same, but with sand marking the centre of the trench.  Ours did need manual alteration but that’s partly due to how tight our site is and the difficulty of getting the digger in the right place.

[JohnMo]

2 hours ago, G and J said:

Same, but with sand marking the centre of the trench.  Ours did need manual alteration but that’s partly due to how tight our site is and the difficulty of getting the digger in the right place.

Good for a simple layout, but when a little more complex not so easy. Ours falls in the complex bucket.

 

[saveasteading]

With two long (and accurate tapes) and Pythagoras you can measure to a few mm accuracy.

OR setting up a long base line and taking offsets from it. 

It's what the ancient Egyptians probably did, and still works.

 

 

[JohnMo]

3 minutes ago, saveasteading said:

With two long (and accurate tapes) and Pythagoras you can measure to a few mm accuracy.

OR setting up a long base line and taking offsets from it. 

It's what the ancient Egyptians probably did, and still works.

 

 

Sure you can. But 30 mins one guy did ours. Why bother with the faff, the double checking yourself. Straight from cad drawing to actual marks on the ground.

 

It also positions house globally correct for position (longitude and latitude) and height from a given datum.

[Jenki]

1 minute ago, JohnMo said:

Why bother with the faff

For me it would be cost. £30 for the tapes and away you go, my time was free. That said I love technology being used in this way.

[G and J]

Perhaps that’s why insulated rafts are so popular.  Pace out a vaguely rectangular area, dump a load of crush on it and lay out the polystyrene tray….

[Alan Ambrose]

>>> Out of interest why did you need a surveyor for

 

Given I'm a bit 'attentive to detail' I made a note on the way home today that I would buy myself a total station for the next build .

 

Re the VAT thing - so surveyor marking our plot is VAT, builder marking out plot before doing something else is 'no VAT'. Perfectly sensible.

Edited yesterday at 18:49 by Alan Ambrose