Whatever the applicable rate, VAT relief is a two stage process – why does it qualify for something other than 20% (with of course accompanying evidence) but also to what extent the relief applies. No scheme will qualify 100% (there are always items specifically prohibited from the lower rates – certain fixtures, fittings & equipment for example), but also each type of scheme has a different application.
Empty VAT relief is the most generous – surprisingly it applies to both renovation works and improvements, including enlargement & extensions.
Conversions and change in number schemes are limited to ‘works necessary for the conversion’ and greater care is required in determining the VAT saving. Before any Contractor can reduce rate their invoices it is mandatory for them to hold evidence of why the 5% rate is applicable and, more importantly, to which costs it applies (HMRC refer to this as an ‘apportionment’).
We can work with you and your Contractor to supply all of the paperwork and supporting evidence HMRC would expect them to hold / submit – finding the middle ground to ensure they charge VAT correctly whilst ensuring you (the property owner) benefits in full from the relief.