My clients are a husband/wife partnership who are acquiring land on which they have permission to erect 2 new residential properties. The clients do not wish to carry out the development work themselves and have agreed terms with a VAT registered builder under which he will operate as a main contractor and hire his own subcontractors under his CIS registration. He will bill the clients for costs in agreed stages and I presume those invoices can be zero-rated. At the end of the build and after disposal of the properties by my clients (and assuming profits are sufficient) there will be a final profit-share under which the builder will receive 25% as a form of management charge and the clients 75%. My main concern is that this charge will attract VAT as the zero-rated project has already been completed. Although the clients do not wish to hand over a profit element until the final outcome is known, is it the case that if the builder were to add a profit percentage to his billings in the course of the contract then it would be zero-rated or is all this caught by the professional services rules as the builder is also acting as a project manager or supervisor? Can contributors see any other snags?
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Not so much a snag (ie nothing to do with VAT), but ...
... have your clients considered the need to register as a CIS contractor (perhaps they already are - you don't say whether they do other development work)?