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Usually, domestic construction services are zero-rated for VAT purposes, unless the work is the conversion of an existing building, or an alteration or extension to an existing building.
Or is the building an annexe?
If the conversion is from commercial to domestic use, then the work can be zero-rated - plus, under certain circumstances, there’s a reduced rate of VAT for conversion of existing domestic premises.
- So should VAT be charged or not?
- And what if the building is used as a residential care home or hospice?
Special rules apply and construction services may be zero-rated - and, similarly, there are special rules if the building is to be used for charitable purposes. We have advised the budget-holders of many construction projects how the project might be structured to take advantage of the zero rate.
After all, no-one wants to pay more tax than they need to!