I am currently renovating a grade 2 listed building from part-commercial, part-residential into a single dwelling. It has been unoccupied for over two years. My builders are not VAT registered and so far, I have bought all the materials. From your page: https://www.taxinsider.co.uk/what-does-the-vat-rate-on-building-works-apply-to-ta, I very much get the impression I cannot reclaim any VAT. Am I right, and is there anything I can do to support claiming VAT back on materials?
Arthur Weller replies:
As you wrote, and as it says in the article, “The 5% rate only applies to the services of a builder, and any materials that he supplies as part of the work he does. If you buy the materials separately, then you will have to pay the full rate of VAT on them from the builder’s merchants. Many private individuals (and sometimes small builders) who are renovating or converting a house think that they can claim the difference between the 5% rate and the 20% standard rate back from HMRC. This is not the case – the 5% rate is charged by the builder and you cannot claim back the difference from HMRC.”