It has been possible for sometime to structure a new build project as a "design and build structure" enabling significant savings on the VAT charged on the services of architects, surveyors and similar professional services where the build element qualifies for zero rating.
HMRC attempted to stop this by arguing that the "design" element was a separate supply and chargeable to VAT at the standard rate. Fortunately, as a result of industry lobbying, HMRC have now conceded the point and will allow design and build structures to be treated as a single composite supply.
The ability to structure contracts this way is very useful for build projects where there is unlikely to be any VAT recovery for the client. Therefore Housing Associations, Charities and Self Build Individuals will be pleased with this news.
Please do contact me if you need any further advice.
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