Input VAT - Construction
My client is a VAT registered property development company. They use one main contractor for their developments, a limited company which is also VAT registered.
They are currently running 2 projects. Project A is a new build and the sales are zero-rated; I understand that input VAT on qualifying building materials is reclaimable. Project B is a conversion of a public house into residential units. I am negotiating with the revenue what proportion of the new units is exempt / zero-rated in order to establish a suitable apportionment ration for recovery of input VAT on qualifying building materials.
My question is this. Things weren't complicated enough so my client has had the bright idea of purchasing building materials for both projects directly and passing them to the contractor to use for contracted works. However in practice this has not worked out as planned. Instead the contractor has been purchasing the materials and claiming back the gross amount from my client via 'expenses' with no added VAT component. He then passes the invoices to my client in order that they can reclaim the input VAT. I have advised them that this is not workable but need clarification. The way I see it, either the contractor reclaims the VAT and recharges my client net of VAT (plus 5% where appropriate) or my client pays the invoices directly and reclaims the VAT directly.
Any advice would be gratefully received.
- What do young accountants know that you don't? 1,957 9
- Company limited by guarantee having only 1 member 118 3
- Are any of you members of The Institute of Financial Accountants - Accountnats certificate 468 5
- flat rate scheme 149 3
- capital allowances - Demolition of a building 162 2
- Limited by Guarantee - Members 82 1
- VAT refund 316 3
- Are you going to Tick and Bash on 21 May? 1,284 37
- Turnover on a tax return 548 12
- incorrect old p60 563 15
- Company to buy shareholder land 126 4
- Deferred income - financial concern no recognised turnover CT600 182 1
- Posting Corp Tax to Sage Line 50 155 1
- Special dividends & CGT 204 1
- Director's Earnings when Drawing from Goodwill profit from Sole Trading Company sale to Ltd Company 200 1
- Networking 368 5
- Bank Interest Held by Solicitor During Divorce 279 2
- US company hiring UK citizens in UK 306 4
- What VAT to reclaim on van purchased on HP? 339 5
- Professional coaching claimable? 297 2