Some input services supplied in the course of constructing a new building are excluded from zero rating, ie Architects, Surveryors and Consultants and Goods on hire.
I have read and re-read notice 708 and I cannot find the section confirming whether or not it is OK to reclaim the input tax on these items, I can see a number of items are "blocked", but it doenst make it clear of these types of inputs are or not. Would anyone be able to help me?
Many thanks.
Laura Landmark
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Replies (1)
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Yes. Sometimes.
I assume by "new building" you mean a new dwelling, as zero rating does not apply to the construction of a new commercial building.
You entitlement to reclaim the VAT on proffessional fees will depend upon what you are intending to do with the new dwelling that you are constructing.
If you intend to sell it (or grant a lease in excess of 21 years) then the income generated will be zero-rated and you can reclaim the associated VAT including on the professional fees (with the exception of the items that are "blocked" as you have discovered).
If you intend to lease the building out on short lets (less than 21 years) then the income generated will be exempt from VAT. You will not be entitled to recover any VAT that you incur in relation to the property, subject to the De Minimis rules.
I hope that helps.
Regards
Paul Taylor
Dains
01283 507960