VAT Notice 708 - reduced rate on conversions

The form of certificate in the notice seems not to be appropriate

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A friend who is not a client because he does not have an ongoing need for an accountant has recently bought a property which consists of 4 separate very small flats and he is having the building reconfigured and modernised and will occupy it as the family home.

VAT notice 708 sets out the conditions in which he can have the work (or some of it) vatable at the reduced rate of 5%.

This is all relatively clear but the Notice includes a form of certificate that needs to be provided to the builder and the wording of the certificate seems not to cover his position.

This is not an area I know about and I have spoken to two other accountants who are in the same position.

Any suggestions?

Replies (5)

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By Jason Croke
12th May 2021 10:06

You don't usually require a certificate, that is only required when the works relates to a Relevant Residential Purpose (RRP) which is things like care homes, student accommodation and similar.
You need to hold, within your business records, a valid certificate when you make any zero-rated or reduced-rated supply in connection with a building that will be used solely for a ‘relevant residential purpose’

There’s no requirement to hold a certificate for zero-rated or reduced-rated supplies in connection with buildings that will be used as one of the types of dwelling described at paragraphs 14.2 to 14.5 (basically describing "a house to live in".

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By lionofludesch
12th May 2021 12:12

From your description of the work, it should be clear to the builder that this is reduced rate. He shouldn't need a certificate.

Thanks (1)
Replying to lionofludesch:
By VATs-enough
12th May 2021 13:28

lionofludesch wrote:

From your description of the work, it should be clear to the builder that this is reduced rate. He shouldn't need a certificate.

Agreed. But I am still amazed at the number of contractors (large and small) that don't really understand or want to apply reduced rate for qualifying conversations.

0% or 20% they can handle, just. But throw in a 5% rate..... "sorry, cannot compute..."

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Replying to VATs-enough:
paddle steamer
12th May 2021 16:39

Fear of getting it wrong, I suspect.

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By Les Howard
12th May 2021 15:38

The certificate provided is incorrect. It even allows for certain RCP works to be reduced rated, which cannot happen!
As my colleagues have stated, reduced rated works to a dwelling do not require a certificate in any case.
It may be appropriate to write a note to the contractor pointing out the guidance or legislation, explaining why it is to be charged at 5%, so he has something to show HMRC if they review it.

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