.png)
.png)
VAT dispute on the zero-rating to building materials and labour.
I have a client who runs a building company. About three years ago he built a house for his brother and charged 20% VAT on materials and labour.
The brother has now asked for the VAT to be repaid to him because the house was classed as ‘new’ and services and materials should have been zero-rated.
The dilemma is that there was a previous house on the site. Although it was almost completely demolished a couple of walls were not taken down and they remain part of the new building. My client thinks that this was a condition of planning consent but is not sure.
The client has suggested that either HMRC should be asked to give a written ruling confirming that zero-rating should have applied or that he should raise a credit note to his brother and reduce his output tax on the next VAT return...
