VAT rate on water borehole

[Rachel C]

Hi,

 

My partner and I are just at the beginning of a self build project, rural build on the family farm. We opted to go down the route of a borehole for water as there is no option for mains and the farm well is some 400 meters away. 
 

Has anyone successfully zero rated a water borehole commissioning for their new build?
I have a £17k invoice to pay to a VAT registered driller and wanted to amend the VAT if it’s possible!

Any experience or advice would be welcome! Thanks 

 

[Bonner]

Not everybody has a borehole so maybe ask someone who does directly. Either post on an existing thread or search for someone who might know and tag them by @name.

[Rachel C]

11 hours ago, Bonner said:

Not everybody has a borehole so maybe ask someone who does directly. Either post on an existing thread or search for someone who might know and tag them by @name.

I’ve done exactly that, thank you!

[Mulberry View]

Hey Rachel

 

Don't know the answer but I'm interested in the answer as we are doing the same thing!

 

 

[Mulberry View]

Did find this which might be useful... Also Andrew the VAT man might also be a good one to ask..

 

Yes, services related to a borehole can be zero-rated for VAT if they are an integral part of the construction of a new qualifying dwelling in the UK. 

This depends on the following conditions:

• "In the course of construction": The work must be carried out during the construction of the new dwelling and not after it has been completed.
• A "qualifying building": The new build must be a self-contained house or flat designed as a dwelling.
• "Closely connected": The borehole and associated works must be "closely connected" to the construction, making the building functional and usable. This includes essential services like water supply. 

[JohnMo]

We paid vat on our borehole and pump and filters to contractor. But included in our VAT submission, which I believe got paid.

[Mulberry View]

11 minutes ago, JohnMo said:

We paid vat on our borehole and pump and filters to contractor. But included in our VAT submission, which I believe got paid.

That surprises me! Are you sure?

[Bramco]

Things may have changed but we included an invoice (for windows, including installation) in our claim and HMRC told us that the company should have zero rated the invoice, so we should go back to them and get them to re-issue the invoice without VAT and refund us the amount.

So to avoid later hassle it may better to make sure the contractor is happy to zero rate the amount.  

We had to supply the windows people with copies of the planning permission so they were covered if their VAT inspector asked any questions.  They were only too happy to sort things out - fortunately!

[JohnMo]

1 hour ago, Mulberry View said:

That surprises me! Are you sure?

Which bit, that I paid vat up front, or claimed it back?

[JohnMo]

2 hours ago, Mulberry View said:

In the course of construction": The work must be carried out during the construction of the new dwelling and not after it has been completed.

Was compliant with that. Was done as we put up the walls

 

2 hours ago, Mulberry View said:

A "qualifying building": The new build must be a self-contained house or flat designed as a dwelling

Was compliant with that, new build house

 

2 hours ago, Mulberry View said:

Closely connected": The borehole and associated works must be "closely connected" to the construction, making the building functional and usable. This includes essential services like water supply

Was compliant with that. No other water connected to house 

[Temp]

2 hours ago, JohnMo said:

We paid vat on our borehole and pump and filters to contractor. But included in our VAT submission, which I believe got paid.

 

I don't think that's the correct procedure.

 

Pretty sure it should all be zero rated to you. So no VAT to pay and reclaim.

 

Might help to provide the company with a certificate. A letter giving your  details, that of the site and copy of the planning permission. Something like..

 

I certify that the service you are providing are for a new house at...

 

You can also refer them to VAT708.

 

You should get the quote revised before you accept it to say vat at 0%.

 

Note you can't reclaim VAT on anything paid before you get planning permission.

 

If the CIL is in your area don't do anything on site until you have filed the exemption forms and have confirmation of receipt.

Edited 43 minutes ago by Temp

[JohnMo]

10 minutes ago, Temp said:

 

I don't think that's the correct procedure.

 

Pretty sure it should all be zero rated to you. So no VAT to pay and reclaim.

 

Might help to provide the company with a certificate. A letter giving your  details, that of the site and copy of the planning permission. Something like..

 

I certify that the service you are providing are for a new house at...

 

You should get the quote revised before you accept it to say vat at 0%.

 

Note you can't reclaim VAT on anything paid before you get planning permission.

 

If the CIL is in your area don't do anything on site until you have filed the exemption forms and have confirmation of receipt.

All a little late now, borehole went in in 2021, vat reclaim in 2023. Scotland so no CIL stuff to worry over.

[Temp]

For info..

 

All services, including supply and fit that might include materials (eg Bricklayers, electrician, plumbers, plasterers) must be zero rated to you.

 

The only things you can reclaim VAT on are materials you buy personally. If shown on a landscape plan as part of your planning permission you can also include trees.

Edited 38 minutes ago by Temp