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VAT TREATMENT BETWEEN GROUPS

VATABLE SUPPLIES BETWEEN DEVELOPER AND CONTRACTOR

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Hi,

looking for some advice on vat treatment, X LTD is a company which ownes the land. X1 Ltd is the contractor who is carrying out the refurbishment and new build works for X Ltd, both are within the same group (2 different VAT numbers)

X1 Ltd relies on the funding received to X Ltd so when doing a re charge for the build cost to X Ltd from X1 Ltd what would the VAT element be? would it be recorded as Zero rated or do we take the VAT on the costs.

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By WhichTyler
18th Feb 2020 15:43

1 X1 should charge X whatever it would charge another customer for building servucea, the fact they are in the same corporate group doesn't make a difference

2 property developments are quite expensive, so the cost of wrong vat treatment is high. Much cheaper to get professional advice

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By spidersong
18th Feb 2020 15:50

If the work you're doing is Zero rated then Zero rate it if it's standard rated standard rate it. Whether you're part of any group, other than a VAT group, is irrelevant to the VAT charge.

Unfortunately you haven't given enough detail to say whether anything should be zero or standard, as all you've told us is there's some land and some building works, some being new build (of something but we don't know what: homes, hospital, speedway track, giant sculpture of an incontinent hedgehog), and some being refurb (again we don't know what (I'm keeping fingers crossed for the hedgehog)).

Depending on those factors depends on what you actually need to charge in terms of VAT.

I assume it's a very hush hush project since you've chosen to be anonymous when mentioning it, so it might be best to discuss it with your accountant who will presumably have all the details)

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Replying to spidersong:
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By Habiburkhan
18th Feb 2020 16:11

Hi,

Thanks for your reply.

we are developing 37 new flats for residential use. however we are retaining a existing building as part of the development due to be a listed building. 34 Flats will be built on the back of the existing building with a separate roof.

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Replying to Habiburkhan:
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By JoF
18th Feb 2020 16:31

What has your Accountant suggested?

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chips_at_mattersey
By Les Howard
18th Feb 2020 16:41

You will also need to check that anti-avoidance rules do not apply. I would consider the Listed Schemes (Scheme 1) in particular. Hopefully it will not apply, but I would advise you reviewing it carefully.

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