Unfortunately VAT is not quite as accommodating as that and my understanding is that you won’t be able to take advantage of the lower concessionary rate when you provide your own labour. All builder’s merchants, as suppliers only of materials, must charge VAT at the prevailing 20% rate at the point of sale, regardless of project circumstance. This is because, no matter how much evidence there may be, the supplier cannot emphatically guarantee that any supplied materials will be used on the qualifying contract, even if they are delivered and unloaded at that site. When materials are supplied and fitted by the same organisation there is no doubt whatsoever where materials have been used.

So, for qualifying zero or concessionary rates of VAT, it is up to the individual client to make the arrangements for any recoveries. With new build this is easy because one claims all of the VAT back via a recognised mechanism. However, for qualifying concessionary rates, i.e. an empty property renovation, you must appoint a bonafide contractor who will invoice you for the supply and fix of their works at the lower concessionary rate. They will have a negative cash flow in the sense that they will still have to pay VAT at 20% on their materials and bill them out to you as part of a supply and fix service at 5%. So, they won’t like it much and they will also want indemnities and proof from you that your project qualifies for the lower rate. But, in your circumstance, where you plan to provide your own labour, I am afraid I do not know of any mechanism you can use to benefit from a lower concessionary rate on material supplies only. Sorry, it’s a bit of a minefield. I would recommend contacting HMRC direct to verify the above. Best of luck.

Tim Doherty (Build It expert)