To VAT or not to VAT, that is the question

VAT is not for the fainthearted.  I was once asked during a networking meeting at what point should you have an accountant.  Of course I think that all but the smallest of businesses should have one.  Firstly because you should actually be able to earn more than you might save in fees, with the time it takes you to do your accounts and your tax return.  Secondly because tax is difficult.  Otherwise we tax advisers would not need to study as much as we do (and we keep on studying year in year out to keep up with all the changes).  My answer on that occasion was: when you are VAT registered you should absolutely have an accountant.
VAT is mean.  VAT is a rebel.  VAT likes to take what you think you know and turn it on its head.
So when a very lovely client asked me to help her work through the maze of zero and reduced rate VAT for new builds and conversions, it was back to the books for a refresher and reading HMRC internal technical manuals for me.
HMRC splits its rules into three main themes:
  1. The building or conversion must be a qualifying (before and after)
  2. The services must be qualifying and not specifically excluded
  3. Where necessary, the customer must issue a certificate to the supplier

The rules are lengthy and complex plus the onus is very much on the supplier to establish the validity of the customer’s declaration (contained in a certificate) and to document all steps taken to do so.  As with the majority of  law, the  examples are non-exhaustive and there are elements of subjectivity and interpretation involved.

So would you know whether a granny annex or a swimming pool could be zero rated?  How about whether the scaffolding you use can be reduced rated?  How about what constitutes building materials?  Would you treat prefabricated furniture for the kitchen differently to that for the bathroom?  Such are just a few of the ‘nuances’ of the VAT rules about this one very specific area. 


Hopefully a little insight into why I would recommend that you engage a qualified accountant if you are VAT registered.  If we can help you with questions about VAT  or any other tax, please get in touch



About the Author
Carolyn Burchell trained with the UK’s top firm of accountants, qualifying as a Chartered Accountant in 1996. Carolyn moved into industry in 1997 working on a number of commercial projects and managing Treasury and Credit functions before taking a career break to have a family. In 2009, Carolyn decided to enter into the stringent Chartered Institute of Taxation examination programme, qualifying as a Chartered Tax Adviser in 2012.

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