Can property developers reclaim vat?
If your suppliers charge VAT, you can claim back 20% of their costs. There is no sales control on your invoices, so you don’t have the problem of paying and reclaiming VAT. If you are charged VAT by your supplier, you can claim back 20% of the costs. However, you will usually be charged a VAT rate of zero for your new building.
And you can’t pay or reclaim the VAT because there are no sales tax records on invoices. No VAT may be levied on goods and services that are exempt. It is also important to note that VAT cannot be reclaimed on goods and services managed in connection with tax-exempt business activities. Property developers are unfortunately not immune from this, and a widespread lack of understanding of how VAT affects their daily operations often results in rules not being complied with and facilitations not being recognized.
To be eligible, delivery should be an initial grant of great interest in apartments, relevant residential properties or relevant charitable properties. The main advantage of this choice is that the %26 construction VAT paid by the landlord on regular expenses can be recovered from HMRC. For VAT reasons, please note that the time of delivery (relevant date) is usually the date of the transfer, but it also includes the date of receipt of a deposit by the seller. So if you convert a three-bedroom house into an HMO, a reduced VAT rate of 5% applies to the conversion work.
Your suppliers (builders and associated trades) must adjust their invoices to show the VAT rate of 5% instead of the usual 20%. This is not a relief that you claim retroactively if you pay 20% VAT to your builders, but they only charge you 5% VAT. Until now, HMRC guidelines state that house builders can reclaim VAT on curtain rods, but not on blinds. As mentioned earlier, VAT legislation for this area is quite complicated and it is recommended that you seek advice from a real estate tax specialist. The certificate is issued by HMRC before delivery, and the developer should take all steps to ensure it is valid.
Again, it is at the discretion of the developer to accept the certificate after the price has been determined, where deliveries will be made after the certificate is issued. The reduced VAT rate also applies to work on a property that was empty for two years at the time you started working. There is a reduced VAT rate that applies to qualified services provided to contractors in connection with projects that involve changing the number of single-household dwellings in a building or a change in the use of a residential building. HMRC is expected to change its guidance after a property developer won a case before a First Tier Tribunal (FTT) that challenges the VAT valuation for blinds in new homes.
