Q. I am in the process of buying a property that has been empty for several years. Substantial renovation is required, and I’ve been speaking to a contractor who says that he will be able to charge just 5% VAT for the work. I don't want to fall foul of HMRC, so is this correct?
A: The answer is "maybe". Building work, and the associated materials, can be subject to VAT at 5% if the building is a dwelling that has been empty for at least two years. However, any professional fees - such as designers or architects - will be subject to VAT at the standard rate. To qualify for the 5% rate, you will need to give the contractor third-party evidence to confirm the empty period. This must be from a source HMRC considers to be "reliable", such as council tax information, electoral register entries, etc. You may also be able to acquire a letter from your local authority’s council’s empty property officer - in which case you will have an acceptable form of evidence without needing to secure any other paperwork. You can find further information on VAT relating to the building trade here.
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