I have planning permission to knock down and rebuild a house. An architect is managing the project and we have contractors responding to tenders.
The contractor will manage the build, and source subcontractors. I understand that the main contractor will invoice us at zero rate VAT for services and materials and they will arrange the "proof" of this between themselves and HMRC. We will just get a zero rate invoice to pay and no requirement on us to work with HMRC.
However, my wife's father is in a privileged position at a large builders merchant. He can source all materials for us at cost, but the invoice will be in his name and we will have to pay him to clear it.
So the question is, how can we qualify for zero rate VAT on a new build, when the materials are purchased from a senior employee of a builders merchant? The self-build zero rate claim form says that the invoice must be in *my name*?
Hello,
I called HMRC advise line and after an hour the best they could suggest was that I read the 700/1 info "should I register for VAT"... And that i shou seek advice. So I looked for you guys
I would advise to seek an advice in person or in writing from a licensed tax adviser. It will not be for free, but will help you familiarise yourself with risks of tax avoidance activities.
We (a construction company) have undertaken 0% VAT new build projects and have always had to pay VAT on our materials from builder's merchants (but then as a VAT registered company claimed it back).
As a non VAT registered person your father in law can't do this.
However, my wife's father is in a privileged position at a large builders merchant. He can source all materials for us at cost, but the invoice will be in his name and we will have to pay him to clear it.
Hi ??
If the father in law is in such a privileged position can he not get the invoice in your name?
Although - good spot Les.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
The contractor will zero rate the VAT on all their purchases and labour... But as I will be purchasing the bulk of the materials from my father in law I will need to use VAT reclaim service myself.
The "peek of the job" is that you can personally get stock "at cost" for your own projects - and the invoice/receipt can only be in his name - not mine/his daughters.
I will write to HMRC directly and explain the case in detail, attach plans etc and see what they suggest.
I notice that although the VAT zero rate form says that invoices must be in my name - at the end of the form it says "if any invoices are not in your name please explain why". I just need to ensure that my scenario is valid. I guess if it isn't then I will still be making a 40-50% saving anyway so not being able to zero rate the purchase isn't a deal breaker.
The build is for a total of £1.6m... so the saving would be substantial.
Thanks
The contractor will zero rate the VAT on all their purchases and labour... But as I will be purchasing the bulk of the materials from my father in law I will need to use VAT reclaim service myself. The "peek of the job" is that you can personally get stock "at cost" for your own projects - and the invoice/receipt can only be in his name - not mine/his daughters. I will write to HMRC directly and explain the case in detail, attach plans etc and see what they suggest. I notice that although the VAT zero rate form says that invoices must be in my name - at the end of the form it says "if any invoices are not in your name please explain why". I just need to ensure that my scenario is valid. I guess if it isn't then I will still be making a 40-50% saving anyway so not being able to zero rate the purchase isn't a deal breaker. The build is for a total of £1.6m... so the saving would be substantial. Thanks
I think writing to HMRC and getting a clear answer, in writing, is the way to go on this one. As you say, the materials savings far outweigh the VAT, so worth making the effort for the sake of a letter
