VAT on PV for New Build

[whinmoor]

Had an enquiry today from a customer thinking of putting PV on a 3 bedroom house he's currently building. He said it's possible to get 0% VAT on many aspects of the construction. He asked whether this would apply to PV or whether it would be 5% or even 20%. I can't believe it would be 20% and told him so but wasn't sure whether it would be zero-rated or the regular 5%.

Anyone know the answer?

Thanks in advance.

 

[Ian-LS]

[h=2]2.4 New dwellings[/h] If you install energy-saving materials during the course of construction of a new dwelling, your supply is zero-rated. If you are involved in the construction of new dwellings you should consult Notice 708 Buildings and construction.

http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&id=HMCE_CL_000514&
propertyType=document#P56_6233

Its zero rated for new builds

 

[finchy]

Although if you charge 5% VAT the customer can claim the 5% back from the VAT man, so no big deal. If he went to Wickes for materials they charge standard 20% VAT, they dont ask you at the till is it a new build.

 

[BruceB]

How would the customer claim it back? The only way I can think of is if the customer is running a VAT reclaim under the DIY self build scheme. However that allows you to reclaim VAT back on goods you incorporate into the building, but expects builders etc who do work for you to zero rate it if appropriate. I believe if you 'accidentally' pay the VAT when you should not have then the HMRC attitude is 'tough'. Happy to be proved wrong on that point but I believe I have read that before.

The answer is to get any appropriate work done for you zero rated if appropriate.

 

[VMan]

My in-laws did a self build, they paid the VAT to the contractors and claimed it back, not sure what is involved, but he defo claimed it back after paying it.

 

[Glen Powell]

as a service it can be zero rated i.e if you pay someone to supply and install a kitchen it is zero rated, if you buy the kitchen for self install you pay the vat, PV installation is zero rated on a new build.

 

[finchy]

most people (not businesses) who do new builds they will get a VAT exception certificate for which they then submit a return, unless they have a main contractor, which is very rare now days. If you do supply goods at zero rated you will need to retain proof of the fact its a new build, in case of inspection. VAT on new builds is very complicated, hence why I say in doubt charge and leave it to client to claim back otherwise you may find your self in trouble if you have an inspection !

 

[Earthstore]

I believe Finchy is correct, if you charge 0% then you need a copy of the VAT exemption certificate to explain why you sold a product without charging VAT.
From your point of view, and to keep your accounts as simple as possible, it would be best to charge the VAT @ 5% and let the customer claim it back, if you choose the first option and the customer does not provide a certificate, or there is a problem, it could end up costing you 5%.
I hope this helps.

 

[Glen Powell]

Totally agree with finchy, however if you are providing a service not supply only and as finchy says they have a vat excemption cert you should zero rate it, 11 years in the trade and 7 VAT inspections says to me this is the simplest way. If you are supply only this is 20% vat. Do not mistake new builds with barn conversions and the like. Get the relevant documents from the customer, if you can not then it is full VAT.

 

[Lastminuteandy]

Sorry to upset everyone but I am doing a self-build and have all the HMRC paper-work. Services are zero rated. Any materials provided within a services contract (ie the cost is one total inc everything) is also zero rated. The provision of materials is at whatever the normal rate would be and it is then up to the house owner to claim vat back - if it is possible!!

Installers do not have an option to "be on the safe side, charge the owner vat and let them claim it back". HMRC is very clear. If you charge an owner vat when you should have charged zero, then the owner CANNOT claim back the vat. It is not a matter of if you dont get it right it will be ok because the owner can sort it out later.

Also, there is no such thing as a zero rate certificate for this. If you did work on my new-build there would not be a certificate I could show you. All you could do is record the address - and of coures note the fact that it is a new house beig built!!

As to whether the owner can claim back vat on PV......
It seems that it can only be claimed back if it was installed as part of a heating system. I will update when I have a clear answer out of HMRC !!

 

[VMan]

I Know for a fact it can be claimed back on a self build project, if not then the HMRC must have messed up somewhere when the in laws claimed their VAT back from a window installation company that charge VAT!

 

[Gavin A]

doesn't alter the fact that it should be zero rated.

everything is zero rated for new build, and suppliers have no business charging vat on new builds at all ever.

 

[BruceB]

I Know for a fact it can be claimed back on a self build project, if not then the HMRC must have messed up somewhere when the in laws claimed their VAT back from a window installation company that charge VAT!

Then your in-laws were lucky. It is quite clear in the HMRC guidance that if you get charged VAT when you should not have been then you cannot claim it back. If the window installation company charged for supply only of building materials then VAT can be claimed back but not if they supply and fit.

"VAT invoices

First, before you can make a claim, you need to make sure you have all the right paperwork in place. That means obtaining VAT invoices for everything, and they have to be correct. If you've been charged the wrong rate of VAT, then you can't claim. For example, if you find out you've been charged VAT in error for services that should have been zero-rated, you can't claim it back from HMRC. However, your builder may be able to obtain a VAT refund by adjusting his account with HMRC. But don't leave it too late. Your builder will have a limited amount of time to correct his VAT account with HMRC.He is likely to refuse to make a correction if it is out of time."

 

[VMan]

doesn't alter the fact that it should be zero rated.

everything is zero rated for new build, and suppliers have no business charging vat on new builds at all ever.

Is a self build being classed differently to a new build? -
So if i were to do a new build, walk into say B&Q to buy a kitchen and i tell them its a new build please dont charge me VAT you think they wouldn't charge me the VAT?

 

[BruceB]

If a B&Q fitter fitted the kitchen for you in a new build then it would be zero rated. If B&Q supply you with the parts and you do it or you get someone else to do it then then the kitchen parts from B&Q are standard rated.

 

[Earthstore]

Well somebody is wrong here, so now we have even more rules that have caused complete confusion.

My opinion,for what it is worth is, if you are charged vat then you can claim it back.
Not every company will do work/supply goods to you at 0% vat, so you must be able to claim it back...

 

[BruceB]

..... Not every company will do work/supply goods to you at 0% vat, so you must be able to claim it back...

There is no 'must' about it unless you can provide a reference. HMRC are very clear - if you are charged VAT incorrectly you have to get a correct VAT invoice issued by your supplier and get the correct VAT charged by them. You cannot opt to get the VAT back from HMRC if you were charged it incorrectly. The quote I gave earlier was from the HMRC site, which although is not the law is normally close enough to it.

I had this issue a few times with suppliers when I was renovating a listed Old Mill as a personal customer. The zero percent in that case was for alterations to a listed building rather than a new build but the principle is the same. The bosses of a joinery company, specialist lime plastering company and local plastering company were very wary when I said please bill me at 0% VAT, but at least their accounts depts/bookkeepers could read so when pointed at particular paragraphs in Notice 708 they understood and complied.

Regards
Bruce

 

[Lastminuteandy]

I did try to quote the HMRC rules on VAT for new-builds clearly earlier. There is NO leeway at all on these.....
1. Services must be charged as zero
2. Services with materials included must be charged as zero.
3. Materials only must be charged at the normal VAT rate.....so 5% for PV.
4. The home owner can claim back VAT on ALLOWABLE materials only. PV is only allowable if part of a heating system required for the house.

I have asked HMRC to clarify if VAT on PV installed on a new-build for the purpose of providing power is also claimable. I am waiting for the reply.

Andy

 

[Cider]

What about the FIT rate?
If its fitted before house passed by BCO it will be new build tarrif and i thought no VAT but even if im wrong the best thing is to install (or bill) after BCO sigs off then its retrofit, pay the 5 % but get higher FIT.
Thats what I did last Dec.

 

[moggy1968]

your immersion is part of the heating system and runs on electric. Would that count as being part of the heating system.
HMRC aren't always right. There was a massive battle between opticians and HMRC a few years ago about VAT on professional fees. HMRC eventually lost, after several appeals (sound familiar!). My folks, who have an opticians business, got over 30 grand back.

 

[Cider]

I remember the vat man trying to do mcvities or who ever makes jaffa cakes.
They said that jaffa cakes are a biscuit to which vat apply's but mcvities said they were cakes to which vat does not apply.

It went to court and hmrc lost as it was decided that biscuits go soft when stale and cake goes hard.

 

[Cider]

quite what that has to do with pv i dont know :yawn:

 

[TedM]

New build and retrofit FiT rates are the same since April 1st. 21p, 16.8p or 9p for upto 4kW.

 

[moggy1968]

quite what that has to do with pv i dont know :yawn:

'cos I like a biscuit when I'm fitting PV. Sometimes I even have a jaffa cake!!
:rockon:

 

[Lastminuteandy]

'cos I like a biscuit when I'm fitting PV. Sometimes I even have a jaffa cake!!

If you charge the customer for your biscuit or jaffa cake as part of the job then will have to declare that as tax benfefit on your tax return and pay tax on it as a benefit!!!!!

 

[Gavin A]

3. Materials only must be charged at the normal VAT rate.....so 5% for PV.

materials only for PV is 20%.

 

[Cider]

New build and retrofit FiT rates are the same since April 1st. 21p, 16.8p or 9p for upto 4kW.

Goes to show how much im out of the picture with installs:dead:

 

[Glen Powell]

3. Materials only must be charged at the normal VAT rate.....so 5% for PV.

Is a typo any products regardless of vat band not included in a service (the supplier does not install it) is 20% at the moment, this does not include jaffa cakes at tea time, but materials going into a building as a new build, listed building or barn conversion.

this is as Gavin says earlier, as most have said earlier, and as I said very close to the begining of the topic. ooppps, I am sure we are all clear now.

 

[jerriais]

Just wondering if HMRC ever got back to you about that Andy? I've got a similar customer today doing a new build and asking about 0% VAT

 

[Worcester]

HM Revenue & Customs: Building trades: VAT when constructing new houses and flats
and
HM Revenue & Customs: Building and construction work and VAT