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Reduced-rate VAT Building Contractor

I have a question relating to the 5% reduced-rate VAT for contractors. I've read notice 708, spoken with HMRC and spoken with VAT experts but there still seems to be some confusion. 

So basically our company (we'll call Bricks Ltd) is a building contractor and undertakes building renovations for the landlord company (we'll call Invest Ltd). Now, we've established which renovations and works qualify for the reduced rate VAT so Bricks Ltd charge Invest Ltd at the 5% rate. Now, Bricks Ltd use contractors to do work for us such as scaffolding companies etc and I've been told that they must also charge us at the reduced rate of 5%. The scaffolding company, however, refuse to change their VAT rate. Could anybody please clarify the rules? Any help would be appreciated. 

Thanks

 

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22nd Mar 2019 16:16

You need to consult an accountant (we'll call Accountant & Co).

Thanks (1)
22nd Mar 2019 16:21

I suspect that the scaffolding contractors already use Accountant & Co, which is why they are quite correctly refusing to charge 5% VAT.

Thanks (5)
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By Mintman
22nd Mar 2019 16:29

We have already consulted with accountants and a VAT expert and are getting different responses.

Thanks (0)
22nd Mar 2019 16:49

There is frequently misunderstanding on this issue: HMRC get this one wrong, so do scaffolding contractors, especially when they follow HMRC guidance.

Supplies in the course of a qualifying conversion are eligible for the reduced rate. If the conversion is 'qualifying' then services of sub-contractors are also charged at the reduced rate.
Are services of scaffolders on the list of excluded services?

No doubt some people you've spoken to agree with me, and some don't!

Choose a VAT specialist. Provide background information on the project. Get a written reply. Pay for it.

Thanks (2)
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By Mintman
22nd Mar 2019 16:51

Thanks for your response Les. So what I am saying is correct but scaffolders are not included and charge at 20%. So a roofing contractor for example would charge us at the reduced rate?

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to Mintman
22nd Mar 2019 19:59

That sounds about right. The simple explanation is that a roofing contractor is carrying out work on the property. A scaffolder is not.

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to Wilson Philips
25th Mar 2019 16:00

My view is that a scaffolding contractor's services are made in the course of conversion.
But in such circumstances I usually take the pragmatic approach, if HMRC and the supplier and recipient agree.

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to leshoward
25th Mar 2019 16:14

I wouldn't argue that the scaffolder's services relate to the conversion. But are they qualifying services, as defined at Note 11 to Group 6 of Schedule 7A to VATA 1994?

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to Wilson Philips
25th Mar 2019 16:39

Your typical scaffolding bill includes two elements.

Hire of the scaffolding
Labour for erecting or dismantling it.

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to lionofludesch
25th Mar 2019 17:04

Yes, but how much of that, if any, fits the definition of either qualifying services or building materials?

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to Wilson Philips
25th Mar 2019 17:25

Building materials is easy.

I'd confidently vote £ 0.00.

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to lionofludesch
25th Mar 2019 17:51

Agreed.

And qualifying services?

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