Account VAT Procedure

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1. Account VAT Procedure:

1. Standard-Rate VAT: The UK standard-rate VAT is 20% that is applied to all product-services applied to sales as a purchase tax. Retail goods may be sold as "VAT Included" where the net and VAT amounts are calculated from the gross amount and the VAT code set to standard-rate.

2. No VAT: An exception is essential product-services such as food that is except from VAT and is selected as "No VAT". Books, training, travel and allowances are generally classified as "No VAT".

3. Zero-Rate VAT: An exception is new build of dwellings that may be certified by the client as Zero-Rate VAT. See details below.

4. Reduced-Rate VAT: An exception is conversion of a building to dwellings that may be certified by the client as Reduced-Rate VAT. See details below.

Glossary:

AOD means Above Ordnance Datum: as Mean Sea Level (MSL) by Ordnance Survey Datum for Newlyn Cornwall (ODN) betwen 1915 and 1921.

2. Zero-Rate VAT:

1. Certain new build residential dwelling construction work (that has been approved by a planning authority) may be certified by the client as "Zero-Rate VAT". See GOV.UK VAT Notice 708

2. Zero-Rate VAT means the main contractor, but not suppliers of subcontractors, shall charge VAT at 0% on all construction work.

3. Zero-Rate VAT does not apply to work that is not construction such as welfare facilities, security fencing, supervision, design or surveying.

4. Zero-Rate VAT just changes the invoice from the main contractor to the client to show 0% VAT - the VAT return and all other matters remain unchanged.

5. In some cases where standard rate and zero-rate work is integrated into a single work package, then the zero-rate shall apply to the complete work package.

6. Planning permission does not in itself signify zero-rate VAT, but it is a significant factor in the determination of zero-rate VAT construction.

7. The client will issue the zero-rate certificate to the main contractor before the main contractor can issue a zero-rate invoice. A sub-contractor working for the main contractor will always issue a standard-rate VAT invoice. Suppliers to the main contractor will always issue a standard-rate VAT invoice. The main contractor alone suffers the consequences of a zero-rate VAT certificate from their client.

8. The client is solely responsible for VAT payments if any change happens in the ten years after a zero-rate VAT certificate is issued to a contractor. The main contractor must retain the certificate issued by the client all relevant invoicing evidence for ten years.

3. Reduced-Rate VAT:

1. Certain significant conversions to residential dwelling construction work (that has been approved by a planning authority) may be certified by the client as "Reduced-Rate VAT". See GOV.UK VAT Notice 708

2. Reduced-rate VAT means the main contractor, but not suppliers of subcontractors, shall charge VAT at 5% on all construction work.

3. A reduced rate certificate is not essential because it is generally self-evident when an office is converted into residential dwellings.

4. Zero-Rate VAT Certificate:

This certificate has the force of law.

Certificate for zero-rate VAT building work.

1. Address of the building: ...

2. Name and address of the organisation receiving the building work: ...

Organisation VAT number (optional): ...

Organisation Charity number (optional): ...

3. Estimated date of completion of the work: ...

Estimated value of the supply by the main contractor: ...

Name and address of the main contractor: ...

4. I have read the relevant parts of VAT Notice 708 buildings and construction and certify the following:

That as the the recepient of construction services, this organisation will use this building for which zero-rating is being sought solely for:

A relevent residential purpose namely as a home.

5. I certify that the information given is complete and accurate and acknowledge that if the building for which zero-rate supplies have been obtained, within a period of 10-years from the date of its completion:

* ceases to be used solely for the relevent residential purposes,

* is no longer used to the same extent for relevant residential purposes, or

* is disposed of

A taxable supply will have been made on which this organisation will have to account for VAT at the standard rate.

Name: ...

Position: ...

Date: ...

Signed: ...

General Warning:

1. HMRC reserve the right to alter the format of the ceretificate through the publication of a new notice. You must make sure that the certificate used is current at the time of issue.

Warning to the issuer:

2. You may be liable to a penalty if you issue a false certificate.

3. You are responsible for the information provided on the completed certificate.

Warning to the contractor:

4. You must take reasonable steps to check the validity of the declaration gven to you on this certificate.

5. This certificate does not automatically confer zero-rating on your supplies. You must check that you meet all the conditions for zero-rating your supply - see Notice 708 Building and Construction.

5. Standard-Rate VAT Services:

1. Site Office, welfare facilities and services, including cleaning of the site office.

2. Security fencing and services.

3. Architecting, Surveying, Consulting, Project Management and Supervisory services.

4. Contract hire, but the operator may be zero rate when invoiced by main contractor as part of the construction project.

5. Scafolding hire, but the labour may be zero rate when invoiced by main contractor as part of the construction project.

6. Cash Flow:

1. VAT is taxation money that is administrated by the company on behalf of HMRC - VAT money is never owned by the company.

2. VAT is paid out to suppliers and VAT is received from clients with the balance paid to HMRC each quarter.

3. Where VAT received from clients is zero-rate, then the VAT paid out to suppliers must be funded by the contractor until it is paid by HMRC at the end of the quarter.

4. Where the client is zero-rate VAT then the main contractor may take out a unsecured short-term commercial loan for a period of up to 90 days for pay VAT to suppliers.

5. On a typical £50,000 contract, the VAT paid out to suppliers will be up to £10,000 that will not be recovered until HMRC pay the VAT balance at the end of the quarter.

6. An unsecured commercial loan (including insurance) of £10,000 for 90 days will cost the main contractor £1,500 that must be billed to the client as an additional cost of sale. The client must be given every opportunity to mitigate this extra cost with stage payments. Where the client chooses to have the contractor pay for their construction until the job is done, then the construction costs to the client must include the cost of an unsecured short-term commerical loan.

7. Every year, an average of 16% of construction companies go out of business leaving the client with a partly completed project, delays and additional costs. A reason may be that construction cash flow is not managed and the extra zero-rate VAT delays can only increase the cash flow risk to the client and the contractor.

Zero-Rated Building Supplies

1. Air conditioning.

1. Bathroom accessories: fixed towel rails, toilet roll holders, soap dishes.

1. Burgular alarms.

1. Central control of light, heat and ventilation.

1. Curtain poles and rails.

1. Decorating materials: paint and plaster.

1. Doors.

1. Dust extractors and filters including built-in vacuum cleaner.

1. Fencing around the boundary (but not landscaping or trees).

1. Firepplaces and surrounds.

1. Fire alarms and sprinkler systems.

1. Fitted furnature (kitchen, wardrobes).

1. Flooring like wood, vinal or tiles but not carpets.

1. Gas and electrical equipment that is wired or plumbed in (not plugged in).

1. Guttering.

1. Heating systems including radiators, warm air, solar.

1. Immersion heater, boiler, hot and cold tanks.

1. Work surfaces, fitted cupboards, kitchen sink.

1. Letter box.

1. Lifts and hoists.

1. Light fittings internal and external, but not remote control unit.

1. Mirrors.

1. Plumbing, showers, in-line water softeners.

1. Power points.

1. Sanitory ware.

1. Safes.

1. Sauna.

1. Smoke Detectors.

1. Solar panels.

1. Solid fuel cookers and oil-fired boilers.

1. Swimming pool including water heaters and filters but not diving boards.

1. Touch pads used for light, heat and ventilation.

1. Turf, top soil, grass seed, plants and trees (some).

1. TV arials and satelite dishes.

1. Ventilation equipment including cooker hoods.

1. Warden call systems.

1. Window frames and glazing.

1. Wind and water turbines.

1. Wiring.

Standard-Rated Building Supplies

1. Aga, unless solid fueld or oil fuel or fitted with water heating.

1. Free standing appliances such as fridge, freezer, cooker, dishwasher, microwave, washing machines, dryers.

1. Coffee maker.

1. Audio equipment, speakers, remote controls (but wiring may be built-in building materials).

1. Satelite, freeview and set top boxes.

1. CCTV.

1. Phone.

1. Electrical components for garage doors and gates.

1. Bedroon furnature - frestanding.

1. Bathroon furnature - frestanding.

1. Curtains, blinds and carpets.

1. Garden furnature, ornaments and sheds.

VAT Avoidance Rules:

1. The client and the main contractor must not be "connected" as below.

2. Your husband, wife, or civil partner.

3. Your relatives, and their husbands, wives or civil partners.

4. Your hunsand, wife, or civil partners ralatives and their hisbands, wives or civil partners.

3. If you are in business as a partnership or company with control, or trustee, you cannot be connected to others in the same line of control.

1. "Reletive" means brother, sister, ancestor or lineal decendent; it does NOT include nephews, nieces, uncles or aunties.

Document Control.

1. Document Title: Account VAT Procedure.

2. Description: Account VAT Procedure, policies and guidelines.

3. Keywords: Account VAT Procedure, policies and guidelines.

4. Privacy: Shared with approved people for the benefit of humanity.

5. Edition: 1.1.

6. Issued: 20 Dec 2018.