- New dwellings that are constructed and sold are not always zero rated for VAT. In order for a new dwelling to be zero rated, there are a number of tests to be met – these are set out in VATA 1994, Sch 8 group 5.
- Conversions often result in a mix in VAT rates – the rules are set out in VATA 1994, Sch 7A group 6, but determining the appropriate rate of VAT is a complex process.
- Ensuring the reduced rate of VAT is charged correctly wherever possible by the constructor is important, in case the VAT becomes unrecoverable for the developer. The 2001 case of Calam Vale is one example to pay attention to.
Source: taxation.co.uk
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