Save £1000s on professional advice
Early Bird Offer! Free tickets to meet independent experts at this summer's Build It Live
Save £24 - Book Now!Early Bird Offer! Free tickets to meet independent experts at this summer's Build It Live
Save £24 - Book Now!Estimate your project costs instantly with Build It's interactive self-build cost calculator
Calculate NowGet an accurate, detailed cost breakdown of your project
Submit plansHello,
I've been a great fan of the magazine since 1996 and we built our own house in 1999. My son has just started his first self-build and my question relates to VAT on groundworks;
He appointed a groundworker on a price to clear the site (reduce the level) and to dig the footings. The groundworker said he had his own machine and gave an all inclusive price including muck away by grab wagon.
The groundworker has now sent my son an invoice for his labour which is zero rated, but he has charged vat on the machine which he hired in despite having a digger of his own (suspect it was on another job) and he has charged vat on the muck away which was done by a third party. He has also charged for extra loads of muck away because he underestimated how much there would be.
I've had a look on the self build section of HMRC website and it implies that plant hired with an operator 'can be' zero rated on a new 'qualifying building' (a new self build is a qualifying building). the words 'can be' sound a little vague, and should vat be charged on the muck away if it was an all inclusive price to do the job. The groundworker is VAT registered by the way.
The DIY VAT Reclaim rules under VAT Notice 431(NB) allow you to zero-rate all the labour involved in the build and to reclaim the VAT paid out on most materials used in the construction of a new dwelling (there are a few exceptions). However, services, including plant hire and muck away, are specifically excluded from the scheme. Because the invoice is explicit as to the nature of the plant hire and muck away service provided by your groundworker, you will not be able to reclaim the VAT charged. If the work had been part of a larger contract for the construction of the whole property, breaking out the plant hire element might sometimes be considered too difficult and time-consuming for the sums involved and might possibly have been ignored by HMRC, but in this case, your groundworker would appear to have invoiced correctly and therefore you will have to follow the rules and pay the VAT element without the option to reclaim.