Q&A: HMRC confirms VAT policy on cladding remediation

On 17 December 2024 HMRC released the Guidelines for Compliance 11 (GfC11) and Revenue & Customs Brief 3/24 outlining its policy on the VAT treatment of cladding remediation. The new guidance specifies when VAT should be charged on cladding remediation and other fire safety works in residential buildings and under what conditions this VAT can be recovered.

What is the VAT treatment of cladding remediation?

Unless the building is not yet completed or the works qualify as snagging 20% VAT will be due on cladding remediation and other fire safety works. For these works to qualify as zero rated or reduced rated the main construction/conversion works also needed to have met the qualifying criteria for a lower VAT rate to be applied.

For snagging HMRC’s view is that this is limited to situations where there was a fault in the original construction...