Team Manager
- “Thanks to Nick’s advice we secured a sizeable tax and VAT rebate which was very helpful towards our barn conversion.”
G.G Sevenoaks - The winner of our April prize draw is The Home of Stone Limited. A box of chocolates are on their way to them.
- “It gives us great confidence knowing we are able to rely on you and your team to solve our tax problems...”.
J Matthews JM Hair Ltd - “I don’t think you could improve your service to us as everyone we deal with is great. Nothing is too much trouble...”.
Christine Grey, Grey’s Health & Safety Solutions Ltd - Having hired Ed Gooderham at Green and Co, we now enjoy more freedom to concentrate on other areas of our business, and have a lot less stress...
Mark Cushing – Twisted Pair Limited - "During the past 21 months, when I have needed help and guidance, Green and Co have assisted me in every way".
Carol Jones, K Jones Electrical Limited - “What a fantastic service these guys give, they not only sort your accounts they give impartial advice to ensure all your affairs are up to date and working effectively.”
All Sorts Training - “Becoming a limited company is a big step but with the support of Sam and Ed this transaction will be made smoothly.”.
Vixtay Web Design - “Being my first visit to an Accountant's office I was a bit nervous about what to expect, I was totally surprised... and my fears dispelled...”.
A potential client - “Nick fully understands our business and we therefore have confidence in his judgement. We feel we receive excellent service”
Bev Baker – B E Baker & Sons Limited - “It’s a really nice team, feel like human beings. Advice is excellent and reassuring. Would recommend to friends”
Giles Davis - “Thank you very much, I will definitely recommend you!”
Charlie Fleming – April House Farming - For every £1,000 charged in fees we saved our clients £2,460 in tax.
(on average over the last 12 months).
Building a House? Don’t Build Up Your Own VAT Problems!
More and more people are developing properties themselves, to live in, or to rent out.
Did you know it may be possible to reclaim much of the VAT incurred even though you are not in business or VAT registered?
There is a DIY VAT reclaim scheme operated by HMRC designed to put “self builders” in a similar position to professional developers and enable them to reclaim VAT on some building costs. You could use this scheme if the dwelling being built or converted is for your own use or say a family member if you are not going to charge rent.
But be clear about the purpose of the dwelling, as if you change your mind and decide to rent out the property once construction is complete, you will be liable to repay some or all of the VAT reclaimed.
Unless you are operating as a building company you will need to use the “Self Build Scheme” even if you are already a VAT registered business such as a farmer or a plumber.
Although it’s called the “DIY Builders and Converters Scheme”, that doesn’t mean you actually have to lay the bricks yourself, it just means you are organising or managing the project for yourself rather than purchasing a finished building from a developer.
However, it just wouldn’t be VAT if it was simple, so as you might expect there are a number of anomalies and pitfalls to look out for.
You can reclaim the VAT if building from scratch, converting a building such as a barn from commercial to residential use, or renovating a former dwelling that has been empty for 10 years prior to starting work.
Your planning consent must be for a separate dwelling, not an annex, and be capable of being sold separately from any other dwelling.
You can’t usually reclaim any VAT if you are going to rent out the finished dwelling. However, if you are building furnished holiday lets you can reclaim VAT if you are already VAT registered, but you also have to charge VAT on the letting.
Perversely, VAT can only be reclaimed on materials used or builders services. For instance, you can’t reclaim VAT on some items such as fitted wardrobes & white goods, or services such as hire of an excavator, or architects fees. You can, however, reclaim the cost of laying on electricity and water, or building a driveway or garage. You could reclaim VAT on an AGA or range if it runs the central heating, but not if it is only for cooking.
You will only get one chance to claim so make sure you’ve finished all the work before the council sign it off(are you sure you don’t want a conservatory?), and your claim has been completed correctly.
Make sure the correct rate of VAT has been charged on builders/electricians/plumbers services. You can be charged different rates according to what’s being supplied and what it will be used for. If work is carried out on a new house VAT should be charged at 0%, but only 5% should be charged on barn conversions otherwise your reclaim will be rejected. Materials purchased directly from a builders merchant will be correctly charged at 17.5%.
Also remember you will need to pay any VAT to your suppliers long before you will get it back.
Needless to say keep invoices and full records of what’s been paid for and used.
Before even obtaining planning permission look into how you will reclaim VAT and what on. Plan how you will carry out the work, for example it may be cheaper to use a VAT registered builder who will hire equipment such as scaffolding and excavators and reclaim the VAT himself, then invoice you at 0%, rather than use a builder not registered for VAT in which case you won’t be able to reclaim VAT on any equipment hired.
If you are thinking of a self build project talk to your accountant or VAT specialist before you start. The amounts at stake can be substantial, and a little planning at the early stages will pay dividends.
For more information please contact Paul Munson, Green and Co, 01633 871122,
e-mail paul@greenandco.com
Green and Co are a three partner practice based in Cwmbran.
They provide a comprehensive range of services, from a new business advisory service, VAT, acquisitions and disposals, to tax planning, audit and accounting – go to www.greenandco.com
