Muckaway

[LA3222]

I have just seen talk of muckaway being zero rated on a blog - didn't want to hijack the blog so started this thread!

 

It was my understanding that muckaway isn't zero rated yet a couple of comments seem to suggest it could be - I just want to explore this further.

 

So if say you hire truck plus driver I would hazard it is zero rated as the driver is providing a service - their service is zero rated, so all of it is?

 

In my situation I didn't hire a driver or truck.  When I had 20T of aggregate delivered they let me fill the truck up with muckaway for the princely sum of £120+vat.

 

As I didn't specifically hire the truck/driver for this task am I correct in thinking VAT does apply and therefore I can't claim it Back?

 

To be fair it is only £72 total in vat, so I am not too fussed - more a point for clarification.

 

Ta

 

Jamie

[newhome]

Ordinarily it can't be zero rated but if you engage a VAT registered trader to do 'groundworks' that include muckaway then all of their work should be zero rated. Similarly if they are hiring in machinery alongside the groundworks you will enjoy zero rating on the whole invoice as the whole invoice should be charged at the lowest applicable rate. 

 

In your scenario they can't zero rate your invoice as it's just for materials (I think?) so it has to have VAT applied and thus you have to pay VAT on the muckaway. If they have zero rated the aggregate as some sort of supply and fit affair then the muckaway should be zero rated too if on the same invoice. A driver isn't providing a service if they are just delivering stuff. They have to be physically doing something on the build like operating a crane or whatever afaik. 

 

That said, if you ask and get away with zero rating then it may be worth a punt, but be aware that they can come after you for the VAT later if HMRC see that they have charged the wrong rate. 

 

https://forum.buildhub.org.uk/topic/6851-a-guide-to-the-vat-reclaim-process/?do=findComment&comment=115965

 

[scottishjohn]

my understanding of the vat scenario  ,and it may be wrong 

any service you get from anywhere if you are charged vat -you cannot claim it back 

any goods you buy --not services -you can claim vat back 

If you are paying to dump spoil --then its a service that you are paying for  ,its not goods you are BUYING to put into the fabric of the building ,no different than architects fees as far as HMRC is concerned

so if the supplier of this service will not do it zero rated --then tough, you have to suck it up -HMRC -not interested 

 

[nod]

We ran up a bill for 13 k for much away and reclaimed hardcore in

I went to settle up

But someone had taken THE pen

This a multi million pound outfit But typical of Groundworks Companies Back of fag packet 

Ours was plus vat 

But I’m sure if I had slapped 13 k on the desk 

He would have said thanks 

[Temp]

Has come up before but the devil is in the detail. For example "site clearance" can be zero rated...

However the reclaim form specifically excludes muckaway and _separate_ transportation/delivery invoices. 

Edited February 16, 2019 by Temp

[newhome]

4 hours ago, LA3222 said:

As I didn't specifically hire the truck/driver for this task am I correct in thinking VAT does apply and therefore I can't claim it Back?

 

Missed this important point. You can’t ‘claim back’ any VAT for services or labour as the reclaim process is for materials only. If you get wrongly charged VAT on labour or services that are able to be zero rated (erection of scaffolding for example) you have to ask the supplier to correct the invoices to get the VAT back. 

 

 

[LA3222]

4 minutes ago, newhome said:

 

Missed this important point. You can’t ‘claim back’ any VAT for services or labour as the reclaim process is for materials only. If you get wrongly charged VAT on labour or services that are able to be zero rated (erection of scaffolding for example) you have to ask the supplier to correct the invoices to get the VAT back. 

 

 

Sorry, when I say claim it back, I mean from the aggregate company.

 

I never asked for it to be zero rated as I didn't think it could be.  I was always under the impression that broadly speaking VAT should not be paid only if:

 

1.  It forms part of the fabric of the build.

2.  If services are included to fit/operate etc.  I.e.  concrete pump is VAT chargeable.  Concrete pump plus operator is zero rated.

 

I'm not looking to claim it back - it's £75 to me in this instance.

 

I was a little confused that the OP in their blog stated that they got muckaway costs zero rated.  Was that luck on their behalf or have I missed a trick??

[newhome]

I've just read that blog and I can't see any clear rationale as to how a lorry arriving to collect muck on its own and not part of a combined 'groundworks' arrangement is zero rated, especially since HMRC even mentions muckaway as a service on which VAT must be paid on the reclaim form. That said, nothing ventured and at the end of the day it's what you can get your supplier to do in terms of invoicing that's important. If they will zero rate then happy days, if not then it's suck it up baby I think as it's not something where it is clear that it should be zero rated. 

 

For others reading here is the blog post that discusses this:
 

 

And a post elsewhere that discusses the same thing:

 

https://www.self-build.co.uk/question/vat-free-demolition-muckaway-new-build/

 

And here is a tribunal case which is not quite the same as the appellant was trying to recover the VAT from HMRC via the DIY Housebuilders reclaim process and was refused (and presumably zero rating at source had already been refused by the supplier).

 

https://library.croneri.co.uk/cch_uk/bvc/2014-tc-04069

 

If you attempt to reclaim something that should have been zero rated at source (supply and fit for example) then generally HMRC will reject the invoice but in doing do will state that you need to go back to the supplier and ask for the invoice to be corrected if it is eligible to be zero rated. The fact that they didn't in this case means that they do not consider that these services that can be zero rated in this scenario I imagine. 

 

See this post for the an example letter that is received from HMRC during the reclaim process (see the reason code for invoices rejected - 2 or 3 are about VAT wrongly charged at source)

 

https://forum.buildhub.org.uk/topic/6851-a-guide-to-the-vat-reclaim-process/?do=findComment&comment=115967

 

 And another

 

https://library.croneri.co.uk/cch_uk/bvc/2011-tc-00873

 

NB - I don't suggest that you put through every invoice for which you have paid VAT to see if HMRC consider that it is eligible for zero rating at source as they can and do fine people if they send in multiple invoices incorrectly (a few should be ok I imagine).