The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
With effect from May 2001, certain renovation and conversion work undertaken in respect of residential accommodation became liable to VAT at the reduced rate. This guidance note provides a comprehensive overview of the VAT treatment of the conversion of a property for a different residential purpose than it was originally used.
The following construction services are included within the scope of the reduced VAT rate:
The business supplying the services needs to ensure that they charge the lowest amount of VAT applicable to the supply made. Therefore, the business should check and confirm that none of the construction services provided could be zero-rated rather than reduced-rated.
Businesses also need to be mindful of the fact that it can only apply the reduced VAT rate to applicable construction services. If the work undertaken is liable to VAT at differing VAT rates (ie 0%, 20%, as well as 5%), the business must apportion the value of the services provided and apply the appropriate VAT rate to the work performed. If the business cannot apportion their work between the different VAT rates, none of the work undertaken will be liable to VAT at the reduced rate and VAT must be charged at the standard rate on all of the work undertaken. Please see VATA 1994, Sch 7A, Part II, Group 6, para 1(3).
The terminology used in relation to land and property transactions
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