3. Be Careful Out There!
20% VAT (1/6th of your margin)
Can seriously damage your project’s
health
Essential to:
Get it right first time
Budget for VAT costs
Utilise all available reliefs
4. Income from residential
lettings
1st sale of new dwelling(s) by ‘person
constructing: 0%
Subsequent sale of dwelling(s): VAT
EXEMPT
Rental of dwelling(s): VAT EXEMPT
Hotel or holiday accommodation: 20%
VAT*
*If supplier VAT registered
5. Zero vs Exempt
Income? – The same: no VAT chargeable
Recovery of VAT on costs? Different!
Cost relates to 0% sales -> VAT usually
reclaimable
Cost relates to exempt sales -> VAT not
usually reclaimable (‘De minimis’ may
apply)
6. Should my supplier charge me
VAT?
Default position: 20% VAT (assuming supplier
registered)
Reliefs
Non-resi
Converted to
resi
5%
Construction of
new dwellings
0%
Refurb of empty
homes (> 2yrs)
5%
Special resi
conversion/
deconversion
5%
7. Common Problem Areas
Scope of 0%/5% reliefs
How much VAT can I claim?
“Educating” suppliers
HMRC – differences of interpretation
8. Case Study 1
Old commercial building
Converted into apartments/student
accommodation
Opportunity to make 0% sale
Interim short-term lets
A problem…
…and a solution
9. Case Study 2
A block of bedsits
Run-down and hard to let
Converted into apartments
“Part” of a building
The problem…
…the solution
10. Key points
Understand your project
Explore and establish scope for relief
Engage with suppliers
Engage with HMRC
If optimum VAT treatment depends on
certain actions: make sure you follow
through!
