VAT treatment of building work
Produced in partnership with Martin Scammell
VAT treatment of building work

The following Tax guidance note Produced in partnership with Martin Scammell provides comprehensive and up to date legal information covering:

  • VAT treatment of building work
  • Why does this matter?
  • The reverse charge
  • What types of buildings qualify for the reliefs?
  • Construction of buildings
  • Residential conversions
  • Empty residential buildings
  • Energy-saving materials
  • People with disabilities
  • Other reliefs

This Practice Note is about the VAT treatment of building work. Specifically, it looks at the types of building work that will qualify for VAT relief, in the form of zero-rating or the reduced rate of VAT.

In order to qualify for relief, it is necessary to have both the right type of building, and the right type of work.

Why does this matter?

The VAT treatment of building work is, of course, important to those actually engaged in it. But it also matters to project appraisals, and will be a consideration in looking at the viability of development and investment opportunities.

If the VAT is going to be recoverable anyway, it may not obviously matter whether it is charged by the contractor. But even in this case it is important to ensure that reliefs are applied correctly, because HMRC will not refund VAT if it should not have been paid.

A further point is that businesses commissioning building work may sometimes have to account for any VAT themselves, under a ‘reverse charge’.

The reverse charge

Where the reverse charge mechanism applies, it is the responsibility of customers to account to HMRC for any VAT, as though they had made the supply themselves (see Practice Note: VAT—the reverse charge on cross-border supplies). They can recover a corresponding amount as input tax, subject