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Q&As
Is VAT Applicable for Demolition and Asbestos Removal?
We need to demolish some old buildings in order to build our new home on the plot of land we’ve bought. Those buildings contain asbestos. Are the costs of a) the demolition and b) the removal from site of the asbestos and associated debris/soil zero rated for Vat? Or will we be charged the full rate of vat but it’s then reclaimable? If so, how do we reclaim it? Or are the rules something else entirely?
2 Answers
This is a moot point and it is not clear from the DIY scheme draft (VAT 43 1 NB Notes) produced by HMRC.
The cost of demolition, including safe removal of any asbestos is part of your enabling works; i.e. the site has to be cleared to make way for the new dwelling. So logically, I think if you have one contractor who has to demolish, clear asbestos, scrape the site, reduce level and does all of this as part of their other groundworks, including drainage, foundations, ground floor slab etc., then they would probably be able to zero rate all of their work, i.e. lump it all together.
But, I think it unlikely that demolition and asbestos removal by a stand-alone firm could be zero rated and instead any recovery of VAT would have to form part of a reclamation process. However, muck away and skips are expressly excluded from reclamation under the rules applying to conversions but not mentioned under new build.
New build excludes services and refers to zero rated supplies for new works (with new materials) and reclamation of VAT for any new materials bought on a supply only basis. Consequently, this would all tend to imply that demolition of, and asbestos removal from, an existing building would be excluded.
My advice is that you ring HMRC’s helpline direct and get a ruling on this so you know how to proceed.
Tim Doherty, Build It expert
If materials are purchased before demolition can these still be claimed back? Would like to start some initial landscaping before demolition of the existing property.