I have a building contractor client who did the building work on a property in 2017. It wasn't a design and build it was one phase of building works. He was responsible for all the works and materials in that phase of work. His client has now come back and asked him to reduce rate all his invoices and repay the VAT to him because the property was empty for several years before the works started. The builder has received copies of several years of council tax bills prior to 2017 showing it as empty and a certificate from his client.
The schedule of works that my client has is very detailed as are the costs associated with it. Identifying the different costs involved isn't an issue. I've read through the VAT notice 708 several times and what I can't work out is should everything be reduced to 5% because the contractor was invoiced and paid all the various elements such as plant hire, scaffold, a site manager etc which would normally be 20%. He then invoiced his client for the work through his company or should the treatment be broken down as per the VAT notice between 5% and 20%. I'm thinking it should be broken down and the VAT rate charged as per the elements of work because it isn't a design and build and my client only did one phase of the work. Could anyone shine any light for me please? Thank you for your time.
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Most works to the fabric of the building can be reduced rated, as can some external works. But there are exclusions for electrical appliances, carpets etc.
But, as you say, some elements of the service are S/R to your client, but included in the supply to his customer. Where those elements relate to the overall supply, I would apportion between R/R and S/R.