Builders face higher VAT bill
Tough market conditions are impacting on the level of VAT paid by the building sector
Builders who seek to rent out newly built properties that are hard to sell
face being hit with a higher VAT bill.
According to Denis Holly, director of VAT for the Midlands at Horwath Clark
Whitehill, current market conditions are making it increasingly difficult for
builders to recover VAT incurred from the building process.
‘When you let out a property, the tax position changes. This will mean HM
Revenue and Customs will look to claw back VAT incurred on the building work. It
is determined as a one-off. The builder needs to decide how long he wants to
let. The longer it is intended the house is to be rented the more VAT will need
to be repaid,’ he said.
In addition, Holly said most in the building sector expect the conditions to
last for two years.
‘In the meantime builders should be aware there is a VAT cost of renting out
property which they really want to sell and it needs to be provided for,’ he