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When the reduced rate of VAT applies on residential property projects.
KEY POINTS
- The dangers of charging VAT at 20% when the 5% rate applies.
- A summary of the situations when the 5% rate does and does not apply.
- Non-residential conversions are popular because residential values exceed commercial ones.
- Problems may arise when only part of the commercial premises are converted to residential.
- Reduced rate can apply if a property has been unoccupied for at least two years.
The question of when to charge VAT at 5% rather than at 20% is still a common one from contractors and others associated with the building industry. This remains the case even though the rules have been in force for nearly 15 years. In many cases a VAT-registered contractor will choose to charge VAT at 20% to protect themselves from a potential...
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