VAT on electricity supply service alteration

[vivienz]

I've just paid the bill, in advance, in full, of course, for the service alteration to bring the electricity supply to where I will need it for the new house.  There's about £400 of VAT on it, and I'm wondering whether it should have been zero rated.  Does anyone have any guidance or experience on this?

[newhome]

New connections to a new house should be zero rated (see section 2.1). Surely yours counts as a new connection if it’s a new property. I’m not understanding the word alteration when used in this context TBH. 

 

https://www.gov.uk/government/publications/vat-notice-708-buildings-and-construction/vat-notice-708-buildings-and-construction#vat-liability

 

 

[vivienz]

Thanks, @newhome.

 

I've just called my DNO, SSE and they have confirmed that a first time connection into a new build should, indeed, be zero rated.  I've confirmed the situation via email to them and attached the Grant of PP.  They will issue a new quote and refund me the £496.75 of VAT.

 

Result!

[Temp]

The link newhome posted is the guide for builders and sub contractors that might do work on new houses...

 

https://www.gov.uk/government/publications/vat-notice-708-buildings-and-construction

 

Tells them if they should charge you VAT (usually not).

 

Typically...

 

You should not pay VAT on services or labor.

Should pay VAT on materials and reclaim it.

If someone does both (supply materials and fit them on one invoice) then all of it should be zero rated to you. 

 

Edited September 17, 2018 by Temp

[DaveH]

Sorry to dig up this post (pun intended!)

 

As my build is on a private road and I have all necessary wayleaves from the neighbours to satisfy the various utility companies I'm having my own groundwork contractors dig the trenches for my utility connections right up to the mains. He has mentioned that his prices will be plus VAT. Can I ask him to zero rate this, and if he won't can I claim it back on my reclaim at the end of the build?

 

Thanks

[vivienz]

Is this for a new build? If so and it's a first time connection into the house, then it should all be zero rated. If he charges VAT you won't be able to claim it back as it shouldn't have been charged in the first place.

[vivienz]

Also, if you are supplying your own sand, etc, keep the receipts as you can reclaim the VAT in that.

[newhome]

As @vivienz says your contractors need to zero rate the entire bill both, labour and materials. You can ONLY claim back vat on eligible materials through HMRC, and even then the invoices need to be in your own name. Any claims for anything other than materials will be rejected. You need to address all other types of zero rating at source. 

[Temp]

+1

 

5 hours ago, DaveH said:

I'm having my own groundwork contractors dig the trenches for my utility connections right up to the mains. He has mentioned that his prices will be plus VAT. Can I ask him to zero rate this, and if he won't can I claim it back on my reclaim at the end of the build?

 

He MUST zero rate his service to you. Refer him to VAT Notice 708 section 3.3.4. I wouldn't accept his quote until it states something like "inc VAT at 0%".

 

https://www.gov.uk/government/publications/vat-notice-708-buildings-and-construction/vat-notice-708-buildings-and-construction

Quote

 

3.3.4 Work closely connected to the construction of the building

Subject to sub-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:

snip

* 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

snip

Or

(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.

 

If HE supplies any materials as well he MUST also zero rate those to you. Any VAT he paid should be reclaimed on his VAT return. This is in section 2.2...

 

 

2.2 Building materials

snip

Builders, however, charge VAT on ‘building materials’ that they supply and incorporate in a building (or its site) at the same rate as for their work. Therefore, if their work is zero-rated or reduced-rated, then so are the ‘building materials’.
 

 

His work must be zero rated therefore his materials must also be zero rated.

 

If YOU buy any materials then you will pay VAT on them and this VAT can be reclaimed.

 

 

Now this is getting annoying. I very carefully checked I had quote and /quote tags in the right place and again the formatting is messed up. 

Edited November 29, 2018 by Temp

[DaveH]

Thank you