Construction Works

BS Design & Management Limited, a building contractor, carried out construction work on a building following the substantial demolition of the existing building. Before the First Tier Tribunal the Appellant contended that the building works relating to or necessary for the residential element of the development were zero rated for VAT purposes. However, HMRC contended that all of the building works were standard rated (although they accepted that the works relating to the residential element qualified for the reduced rate). The tribunal found that the original building had been completely demolished to ground level, other than the party wall, and the front and two side facades. As the demolition of party walls was ignored, and as it was a condition or requirement of the statutory planning consent that the front and side facades be retained, the tribunal found that the original building ceased to be an 'existing building'. Accordingly, the supplies made by the company were in relation to the construction of a building. The tribunal also found that part of the building was designed as a dwelling with the result that the relevant supplies attracted VAT at the zero-rate.


In light of the above and given the wide ranging reliefs that are available, if any of your clients are undertaking any construction and/or building conversion works, they should contact our free Helpline to discuss this VAT liability of the works and the possibility for making savings.

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