Commentary

V6.270 Recovery of input tax

Part V6 Business by business

V6.270 Recovery of input tax

V6.270 Recovery of input tax

Housing associations in general face a restriction in the recovery of input tax because their core activity results in exempt supplies. Some associations take the view that it is not worthwhile, given the amounts potentially recoverable, to even consider a partial exemption method. However, depending upon the nature of supplies ancillary to renting dwellings, savings may be worthwhile. This section looks at the various recoveries which can be achieved, the reliefs available from VAT and considers possible partial exemption methods.

New build

Supplies made by a building contractor in the course of construction of a new dwelling or building to be used solely for a relevant residential purpose are zero-rated for VAT purposes.

Zero-rating only applies to services which are supplied as part of the construction or civil engineering work relevant to the beginning or ending of the construction work and are carried out prior to the first occupation. Such work includes—

  1.  

    —     demolition work carried out as an integral part of the construction contract;

  2.  

    —     site clearance;

  3.  

    —     earth moving;

  4.  

    —     necessary civil engineering work within the contract;

  5.  

    —     foundation work;

  6.  

    —     bricklaying, plastering, carpentry, roofing and plumbing services;

  7.  

    —     mechanical and electrical services;

  8.  

    —     plant hire provided with an operator;

  9.  

    —     scaffolding—erection and dismantling;

  10.  

    —     builders' clean—internal and external;

  11.  

    —     first-time decoration;

  12.  

    —     remedial and repair work carried out during the course of construction;

  13.  

    —     site restoration, which would include clearance, levelling and drainage of land, laying topsoil and grass, pathways;

  14.  

    —     “soft landscaping”, ie

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