I have a client who has been advised they can charge reduced rate VAT on a construction project they are doing - a VAT consultancy has advised the % split to be reduced and standard charge. Has anyone any experience of working with this and therefore any advice on what to watch for when invoicing etc. Luckily this client is keen to get it all right which makes it easier than unpicking a mess but know it will be a bit of a minefield.
I have seen this in a clients records.. its most probably down to energy savings installations.. The VAT advice agency ensure you are installing the right products, in order to charge 5% VAT whilst reclaiming 20%
There are a number of types of construction work which are charged at 5%. For completeness, ask the VAT consultant to provide a reference to the legislation and HMRC Notice, for your file. (I do loads of such projects, so I am sure he is right!)
thanks everyone - its a renovation on a building we have had confirmed (by the council) as having been empty for over 2 years. WE have a detailed break down from the consultant of what to reduce rate, what to standard rate and what to apportion.
Now my client wants a letter to give to sub contractors informing them of the rate to charge us. I believe this is ok but have no idea on what to produce, if anything is needed. The certificates in VAT 708 don't seem to apply to this (unless I am misreading them) does anyone have any suggestions?
When the building is a dwelling, no formal certificate is required. If, however, your contractors are concerned, you can re-word the template certificate for them. Happy to help!
I asked my plumber about this yesterday.. if anyone is interested, this is what he told me:
He gives the domestic client an invoice that just shows the amount they have agreed (which he knows includes 20% VAT but domestics don't care about VAT, they just care about bottom line)
He then put all the elements of the materials and labour into a form on a website
The VAT saver company then work out the reduced VAT and charge him a % of the saving.
He then staples this form to the back of his invoice and declares what the VAT saver form tells him to.
Can I just confirm that our sub contractors charge us the reduced rate VAT or the VAT in the apportioned amounts? or do they charge us standard rate - will obviously affect cash flow. On hold to HMRC but don't hold out much ope I know how helpful they can be
