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Independent School Sports Hall and VAT

Independent School Sports Hall and VAT

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A plumbing client has invoiced a main contractor for their work on a new sports hall for an independent school. I assume that this is because it's intended to be used solely for a relevant charitable purpose (RCP) - correct?

His involvment is worth £30-£40k and the main contractor has told him that the project is Zero Rated and my client's invoices should be Zero Rated.

I've suggested that my client obtain a copy of the Zero rating certificate.

Having looked at this further, I came across a note on Centurion VAT Specialists website indicating that the Zero rating may not extend to subcontractors like my client. They say 'In respect of buildings intended to be used solely for RRP or RCP, the supply of construction work can only be zero-rated when it is made to the person who intends to use the building (or the part which qualifies for zero rating) for such a purpose. The main effect of this is that, whilst the main contractor can zero-rate their construction services (and, in some cases, materials) on such a building, a subcontractor must standard rate all supplies to the main contractor.

The rules for buildings designed as dwellings are slightly different as they allow for subcontractor’s supplies to be zero-rated. There is essentially no rule that says the services must be supplied to the person who will use the dwelling, unlike the above rule for RRP and RCP.'

Can anyone confirm the position?

 

Replies (7)

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chips_at_mattersey
By Les Howard
21st Dec 2019 22:31

Centurion are correct. Sub-contractors’ services for RCP and RRP projects are standard rated, as their services are not supplied to the operator of the building/institution.
For a dwelling, zero rating applies to all sub-contractors providing eligible services.
The guidance is in Notice 708, but is not where you would expect to find it!

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Replying to leshoward:
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By CWservices6064
21st Dec 2019 22:46

Thanks for the speedy reply. I'll get the client to re issue his invoices ASAP!

I guess the main contractor just pays him the VAT and claims it in his return so no cost other than cash flow?

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Replying to leshoward:
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By CWservices6064
06th Jan 2020 18:53

Is the relevant section 17.4?

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Replying to CWservices6064:
chips_at_mattersey
By Les Howard
08th Jan 2020 10:42

Correct. It highlights that a sub-contractor cannot zero rate works in relation to a certificated (RCP or RRP) building.

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RLI
By lionofludesch
22nd Dec 2019 11:44

The thing is, the main contractor will have a valid zero rating certificate.

The subcontractor won't. So he must charge VAT.

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Replying to lionofludesch:
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By CWservices6064
22nd Dec 2019 12:32

Thanks for the reply.

So the main contractor shouldn't have a problem with my client re-issuing his invoice with VAT as they can recover it -correct?

My client has indicated that the main contractor was the one who told him he should zero rate his invoices which is a concern........

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Replying to CWservices6064:
RLI
By lionofludesch
22nd Dec 2019 13:48

CWservices6064 wrote:

Thanks for the reply.

So the main contractor shouldn't have a problem with my client re-issuing his invoice with VAT as they can recover it -correct?

Sounds like you'll have to convince him he's wrong.

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