VAT on New Build
Discussion
Hopefully someone can help.
I am looking at building a new community hall. Under the original proposal this was to be freestanding and therefore I understand that no VAT would have been payable on the construction costs, although it would have been on the professional fees.
The revised proposal envisages a building that also includes a public library and registrars office to be occupied by the County Council. Is there a prospect that in this case the Community Hall part could be subject to VAT. The Community Hall is going to be built on behalf of a registered charity.
I am looking at building a new community hall. Under the original proposal this was to be freestanding and therefore I understand that no VAT would have been payable on the construction costs, although it would have been on the professional fees.
The revised proposal envisages a building that also includes a public library and registrars office to be occupied by the County Council. Is there a prospect that in this case the Community Hall part could be subject to VAT. The Community Hall is going to be built on behalf of a registered charity.
No VAT on Residential New Builds. That's not to say you don't pay it, but it is recoverable!
You will, unless Trade have to pay VAT on materials and recover this. Contractors/Builders and Professionals may or may not charge VAT (if they are "zero-rated"
if not then they will charge you the VAT and you should reclaim this as above.
This link seems to have all the right questions (and answers!)
http://customs.hmrc.gov.uk/channelsPortalWebApp/ch...
That links to Notice 719, there's also Notice 708 (Building and Construction, see link below) which should apply, in your case as a registered Charity.
http://customs.hmrc.gov.uk/channelsPortalWebApp/ch...
It doesn't necessarily have to be freestanding - it's the fact that it's a new build - i.e. whatever was there is demolished to the ground (basement can remain), although you could keep an existing facade or facades and it would still count. It can be a semi-detatched building, but I would contact HMRC to get them to clarify this item in your case. See point 4.1 from the first link.
I think the difficulty may be that the Community Hall isn't going to be exclusively used for Charitable Purposes... It all starts to get a bit complicated at that point, but I would suggest getting it agreed before embarking on the Project - i.e. talk to HMRC about it.
HTH
You will, unless Trade have to pay VAT on materials and recover this. Contractors/Builders and Professionals may or may not charge VAT (if they are "zero-rated"
if not then they will charge you the VAT and you should reclaim this as above.This link seems to have all the right questions (and answers!)
http://customs.hmrc.gov.uk/channelsPortalWebApp/ch...
That links to Notice 719, there's also Notice 708 (Building and Construction, see link below) which should apply, in your case as a registered Charity.
http://customs.hmrc.gov.uk/channelsPortalWebApp/ch...
It doesn't necessarily have to be freestanding - it's the fact that it's a new build - i.e. whatever was there is demolished to the ground (basement can remain), although you could keep an existing facade or facades and it would still count. It can be a semi-detatched building, but I would contact HMRC to get them to clarify this item in your case. See point 4.1 from the first link.
I think the difficulty may be that the Community Hall isn't going to be exclusively used for Charitable Purposes... It all starts to get a bit complicated at that point, but I would suggest getting it agreed before embarking on the Project - i.e. talk to HMRC about it.
HTH
Edited by ginettag27 on Tuesday 9th October 11:29
Although flipping that idea on it's head, and re-reading the text (again and again!)..
They do make pains to indicate those who are not eligible and you don't seem to fall in to those categories.. Charity status aside, if you are building a new building and it's intended purpose is _not_ for business purposes then you should be able to claim the VAT back or not pay VAT where applicable.
I would strongly suggest talking to HMRC about it though - they should be able to give you a definite answer.
They do make pains to indicate those who are not eligible and you don't seem to fall in to those categories.. Charity status aside, if you are building a new building and it's intended purpose is _not_ for business purposes then you should be able to claim the VAT back or not pay VAT where applicable.
I would strongly suggest talking to HMRC about it though - they should be able to give you a definite answer.
Hmmm... Digging a little deeper...
"3 What buildings are covered?
3.1 New buildings
Claims can be made for completely new buildings designed as, or intended for use for the following purposes:
a. dwellings (for private residential occupation)
b. communal residential buildings (but not those which will be run as a business)
c. charity-run buildings, strictly for non-business purposes
d. charitably-run village halls or other buildings to be used similarly in providing social or recreational facilities for a local community. (This includes church halls which will be available for hire).
"
Point d) is of interest here..
from : http://www.housebuilding.co.uk/vat_reclaim.htm
But it will all have to be agreed upfront anyway, so contact HMRC about it and also note that there is a strict time limit on reclaiming VAT back (3 months from completion!).
"3 What buildings are covered?
3.1 New buildings
Claims can be made for completely new buildings designed as, or intended for use for the following purposes:
a. dwellings (for private residential occupation)
b. communal residential buildings (but not those which will be run as a business)
c. charity-run buildings, strictly for non-business purposes
d. charitably-run village halls or other buildings to be used similarly in providing social or recreational facilities for a local community. (This includes church halls which will be available for hire).
"
Point d) is of interest here..
from : http://www.housebuilding.co.uk/vat_reclaim.htm
But it will all have to be agreed upfront anyway, so contact HMRC about it and also note that there is a strict time limit on reclaiming VAT back (3 months from completion!).
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