Who we help
VAT advice for property developers
The VAT on your build cost is decided by the building, the works and each material, not by the rate on the first quote. We work out the rate for every line before you commit, so the appraisal, the tender and the contractor's invoices all rest on the same answer.
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The rate on the build cost
New dwellings are 0%. Most conversions are 5%. Plenty of work is correctly 20%. On a large contract the gap between those rates is a major line in the appraisal, so it needs settling before the price is.
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Recovering VAT through a zero-rated first sale
The first sale, or lease of more than 21 years, of a new dwelling or of a dwelling converted from a non-residential building is zero rated when you are the person who built or converted it. That is what lets you recover the VAT charged on the works.
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Conversions at 5%
Offices, shops, barns and pubs turned into homes, houses split into flats, flats combined into a house, and conversions into HMOs can all take the reduced rate. The property does not have to have been empty.
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Mixed-use apportionment
Where a scheme has shops below and flats above, only part of the work qualifies. The supply is split on a fair and reasonable basis, and the method is recorded at the time, not reconstructed later.
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Tenders priced on one VAT basis
If each tenderer makes their own VAT assumption, the prices cannot be compared. We set the rate for each element before the tender goes out, so every contractor prices the same way.
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Variations mid-build
A variation takes the rate of the element it varies. Added phases, design changes and a contractor proposing a different rate are all dealt with under the advisory retainer, with a written record each time.
Settle the rate before the price is fixed
The VAT rate on a building contract is not one number. A new block of flats is zero rated, but the carpets and the appliances in it are not. An office turned into flats is 5% on the contractor's services, while the architect's fee stays at 20%. A building with shops below and homes above has to be split. If the tender goes out without that worked through, each contractor makes their own assumption and you end up comparing prices that are not on the same footing.
The cheap time to fix this is before tender. Once invoices have been raised at the wrong rate, the remedy is a credit note and a corrected invoice from the contractor. VAT charged in error is not something you can recover from HMRC as input tax.
Your own sale matters as much as the rate you are charged. The first sale or long lease of a new dwelling, or of a dwelling converted from a non-residential building, is zero rated when it is made by the person who built or converted it. That is what allows the VAT on the works to be recovered.
What you get from us
Start with a qualification report if the question is whether the scheme qualifies at all. Go straight to the line-by-line analysis if you already have a tender or a bill of quantities. That gives you the right rate for every part of the tender, with written reasoning you can rely on and a letter for the contractor. For cover during the build, the advisory retainer deals with variations and new phases as they arise.
The fee is fixed and agreed before we start. Some schemes are correctly 20%, and where that is the answer we say so. Send us the tender or quote and we will tell you whether there is anything to pursue.
Questions
Straight answers.
When should we bring you in?
Before the tender goes out, or at the latest before the contract is signed. The rate can then be written into the pricing documents. After invoices have been raised at the wrong rate, the only remedy is a credit note and a corrected invoice from the contractor.
Does a building have to be empty to get 5% on a conversion?
No. The two-year empty rule belongs to a different relief, for renovating empty homes. A conversion qualifies because the number of dwellings changes, or because the building becomes an HMO or a residential institution. Whether your scheme meets the conditions is what the analysis establishes.
Our contractor charged 20% and we think it was wrong. Can we recover it from HMRC?
Not as input tax. VAT charged in error is not recoverable from HMRC by the customer. The contractor has to issue a credit note and a corrected invoice. Our contractor letter sets out the rates to apply and what to do about invoices already issued.
Do you deal with HMRC or file our returns?
No. We do not act as agent with HMRC, we do not submit returns or claims, and we do not represent anyone in an enquiry. We do the rate analysis and the paperwork. Filing stays with you or your accountant.
Next step
Send us the tender before you fix the price
Upload your builder’s quote or tender. We look at the project and the pricing and tell you whether a lower rate is worth pursuing, before you commit to anything.
- Fixed fee, agreed up front
- Every rate tied to the legislation
- We'll tell you if it's 20%