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Saving VAT on construction work


My client has constructed a new block of flats and rented these out on assured shorthold tenancy contracts. The builder has unexpectedly charged VAT to my client which he cannot recover and is threatening my client’s profits. The site had contained a large house which was knocked down but the architect’s plans showed that some parts of the building remained and became part of the new block of flats. The builder said he is not permitted to zero rate the construction work as the existing building was not demolished to ground level. What can my client do? 


This is a complex area of VAT.
One approach might be to examine the contracts as to whether they entitle the builder to pass the VAT charge on to the client. A case...

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