Value Added Tax

Buildings and construction ― self-supply charge for internal construction projects

Produced by Tolley
  • 06 May 2022 08:01

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Buildings and construction ― self-supply charge for internal construction projects
  • When does a self-supply charge arise?
  • What are the ‘specified’ services which lead to the charge?
  • How is the labour valued?
  • How is the self-supply charge accounted for?
  • Practical points around the self-supply charge
  • VAT groups with construction companies
  • Services provided both internally and by contractors
  • Interaction with the capital goods scheme
  • Interaction with the registration threshold

Buildings and construction ― self-supply charge for internal construction projects

This guidance note provides details of a self-supply VAT charge that can arise where a business uses its internal labour to undertake certain construction works.

In-depth commentary on the legislation can be found in De Voil Indirect Tax Service V3.244.

When does a self-supply charge arise?

A self-supply charge arises where the following conditions are met:

  1. a business provides ‘specified’ construction services

  2. the services are provided for the business itself (or its VAT group)

  3. the business uses its own internal labour

  4. the open market value of the labour would be at least £100,000 (excluding the value of any services which would be zero-rated if supplied by a contract builder)

VATA 1994, s 5(6); SI 1989/472, Article 3(1), (2); Notice 708, para 25.1

The self-supply charge means that the business treats the

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