The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note explains when works in converting premises to different residential use can qualify for the reduced rate of VAT.
For an overview of the liability of construction services more broadly, see the Construction ― zero-rating of construction services guidance note.
In-depth commentary on the legislation and case law around reduced-rated conversions is found in De Voil Indirect Tax Service V4.411.
Conversion works will generally never qualify for the zero-rate of VAT (see the Construction ― conversion, reconstruction and alteration of existing buildings guidance note) with the exception of certain conversion works supplied to housing associations (see the Conversion ― zero-rating non-residential conversions (housing associations) guidance note).
However, some conversion works can qualify for the reduced rate of VAT, provided the following conditions are met:
the conversion is a ‘qualifying conversion’
the services are ‘qualifying services’
the services are supplied ‘in the course of conversion’
if appropriate, a valid certificate is held
if appropriate, planning consent / building control approval has been obtained
VATA 1994, Sch 7A, Group 6, Item 1
These conditions are explored further in this guidance note.
There are three different types of qualifying conversion:
a changed number of dwellings conversion
a house in multiple occupation conversion
a special residential conversion
VATA 1994, Sch 7A, Group 6, Note 2
Each type of conversion is described in turn below.
A changed number of dwellings conversion takes place when:
a building (or part of a building) is converted
after conversion, the building (or the part of a building) contains a greater or lower number of single household dwellings
after conversion, there is at least one single household dwelling
VATA 1994, Sch 7A, Group 6, Note 3
This may seem like a convoluted rule, but essentially the number of single household dwellings cannot be the same before and after conversion, and at the end of the conversion, there must be at least
**Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason.
Access this article and thousands of others like it free for 7 days with a trial of TolleyGuidance.
Read full article
Already a subscriber? Login
Why capital losses are importantCapital losses are usually set against the capital gains that arise in the same year as the loss, reducing the total taxable gains for that year. Losses not used in this fashion are normally carried forward to be set against the next available gains.However, in
Legislative definition of plant and machineryThe general rule allowing capital allowances on plant and machinery is given at CAA 2001, s 11. There is no statutory definition of the term ‘plant and machinery’ but there is confirmation in the legislation on what constitutes a building or a structure
Investors’ relief is a capital gains tax (CGT) relief on the disposal of qualifying shares in an unlisted company. A taxpayer making a disposal that qualifies for investors’ relief will pay tax at a rate of 10%.Although it is a separate relief, the rules for investors’ relief were intended as an
Terminal loss relief for trade losses in the final 12 monthsTrading losses incurred by a company in the final 12 months leading up to the discontinuance of trade may be carried back for up to three years from the period beginning immediately before that 12-month period. So if the final accounting