Zero rate vat to sub contractors

[J.C.E]

Morning guys

I am doing some new build flats that qualify for zero rate vat. So I am charging vat at zero % to the main contarctor.
However I have a lad working for me (labour only) on the job but he is VAT regiestered. I deduct his CIS from his invoices to me. Do I pay him vat or should he too charge at zero% to me?

Cheers

J

 

[Mike Johnson]

As far as I am aware, if you are registered for VAT you must charge VAT on everything you invoice, I would call HMRC for clarification.

 

[pirate]

It used to be the case that you reclaimed the VAT after a house was built. You paid VAT on materials etc then got back the total amount of VAT on the build. If that hasn't changed, you should charge VAT on your invoices to the builders. They can claim it back from HMRC...and you will be liable to account for the VAT you should have charged.

 

[snowhead]

Buildings and construction (VAT Notice 708)

How to work out the VAT on building work and materials if you're a contractor, subcontractor or developer.

www.gov.uk

 

[J.C.E]

VAT for builders

VAT rates for building work, including plumbers, plasterers and carpenters - new houses and flats, work for disabled people, energy saving, grant-funded heating, conversions and renovations, properties that are not homes

www.gov.uk

just need to know if i pay for vat on a sub contractos invoice to me (who is not charging vat)

 

[snowhead]

As per Mike earlier, the way I read it is anyone and everyone who is VAT registered, including your VAT registered labour only, should be charging, infact must, charge VAT.

It's not untill completion that the project can be deemed VAT Zero.
Althought the project SHOULD be Vat Zero it may not meet the criterior, for example the planning is changed and it becomes Business premises prior to completion.

 

[mattg4321]

I’m pretty sure that’s not right.

You only reclaim the vat at the end if you’re a non vat registered house builder or personal self build. I know because I did this myself a couple of years ago.

Otherwise all construction work on new builds is zero vat rated. Nobody charges vat on new builds. Including all sub contractors. I’m sure we never have. You can of course reclaim vat on your materials purchases in the usual way.

Please check this with your accountant though.

 

[plugsandsparks]

Working on a new build , these are my experiences.....

HMRC confirmed to me that i should not charge VAT to the client, this saves the hassle to them of having to deal with a VAT reclaim after building completion. I have therefore not be charging VAT on labour or materials.

I have had zero success convincing subs to NOT charge me VAT, this has caused me some cash flow issues , whilst i reclaim this VAT from HMRC.

The main talking point is what qualifies for zero VAT and what does not. The general rule (which we have been following is.... If you turn the house upside down what falls out does not qualify.... lol

 

[mattg4321]

You were actually able to reclaim this vat the subs charged you? Through what mechanism?

I’ve not had to attempt it, but I’m sure my accountant advised it may not be possible to do so. My memory is hazy on that though.

 

[DefyG]

Gets complicated with the introduction of the Reverse Charging VAT! which stated TODAY!!!

 

[mattg4321]

What a load of BS that is. Going to really mess up a lot of businesses cash flow.

 

[Darkwood]

I am subbing to a company on one of these builds, I have been instructed not to charge VAT on Mat' or Lab' even though I am VAT registered, there are certain jobs on the new build that do not qualify for zero VAT which makes it a minefield if you are doing both.

 

[DJAndy]

I am subbing to a company on one of these builds, I have been instructed not to charge VAT on Mat' or Lab' even though I am VAT registered, there are certain jobs on the new build that do not qualify for zero VAT which makes it a minefield if you are doing both.

Had similar last summer on a refurb project where they were also adding apartments. Because of the way the additional apartments were added the building works (including electricals) on the new apartments were 5% VAT, all work on the existing apartments was standard rate, and the post building work was also at standard rate.

Most of the VAT registered contractors such as myself of course worked exclusively on the building works for the additional apartments.