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Q&As
What is the process for reclaiming 5% VAT on a conversion?
When purchasing materials that are VAT rated at 5% does the builder need to get invoices that record their company, the purchaser and the clients name and address in order to be valid for a reclaim?
One Answer
Hi there,
Thanks for reaching out with your question. The 5% VAT rate is used when you are carrying out the conversion of a non-domestic property (barn, chapel, industrial unit or other business premises) into a domestic property for your home. It is also used for properties that have been empty for more than 10 years.
Your builder, if they are a VAT registered business, will purchase the materials from their suppliers and be charged the standard VAT rate which they reclaim through their VAT return. They in turn invoice their charges for labour and materials at the reduced rate of 5%. The invoice they issue will show their details: name, address, contact details (Company Number if they are a Limited Company) and their VAT Registration Number. It will be invoiced to you the client and show your address.
The following are not VAT invoices and cannot be used in the claim: Pro-forma invoices, Invoices that state ‘this is not a tax invoice’, Statements, Delivery notes, Orders, Letters, Emails or other correspondence.
When you purchase materials from a builder’s merchants, they will issue you with a VAT invoice from their accounting system charging the standard VAT rate – this is acceptable for the HMRC VAT Reclaim scheme. An invoice produced from a till is also acceptable to HMRC for your claim. Just ensure that your supplier is VAT registered and a VAT number is on your invoice.
The lower VAT rate of 5% is also used by trades when they carry out works on a property that has been unoccupied for more than 2 years. Unfortunately, you are unable to reclaim the VAT under these circumstances
Kathy Tisdale (VAT Reclaims expert)