V6.197 Liability

It is both reasonable and justifiable to start with the principle that everything supplied by the contractor is standard-rated unless there is a specific exception which provides otherwise. In particular:

  1.  

    –     there is scope to zero-rate certain construction services; and

  2.  

    –     there is scope to apply a reduced rate to certain other construction services,

provided that in each case they are rendered as part of a qualifying building project. This section explores the scope of zero-rating construction services and the application of the reduced rate.

Zero-rating

In order to ensure that relief from VAT applies, the contractor needs to know what services (and materials) can be zero-rated and what evidence HMRC will wish to see to support the zero-rating.

Services eligible for zero-rating fall into the following categories—

  1.  

    (i)     Construction services supplied in the course of the construction of a qualifying building (VATA 1994 Sch 8 Group 5 items 2(a));

  2.  

    (ii)     Construction services supplied to a housing association in the course of converting a non-residential building into a qualifying building (VATA 1994 Sch 8 Group 5 item 3);

  3.  

    (iii)     Construction services supplied in the course of the construction of any civil engineering work necessary for the development of a permanent residential caravan park (VATA 1994 Sch 8 Group 5 items 2(b));

  4.  

    (iv)     (Prior to 1 October 2012) construction services rendered in carrying out approved alterations to qualifying protected (“listed”) buildings (VATA 1994 Sch 8 Group 6 items 2 and 3);

  5.  

    (v)     Construction services rendered in connection with certain home improvements or

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