VCONST12100 - Building materials - developers and the 바카라 사이트˜Blocking Order바카라 사이트™: blocking input tax

About the 바카라 사이트˜Blocking Order바카라 사이트™

The purpose of the 바카라 사이트˜Blocking Order바카라 사이트™ is to provide broad equity between people who have construction work done for them by a contract builder on the one hand and, on the other, someone who purchases a building from a speculative builder (that is a developer that builds and sells as principal).

In the former, the construction costs are zero-rated with the supply of goods that are not building materials being standard-rated (VCONST11000).

In the latter, the supply of the completed building is zero-rated, but the developer is prevented (or 바카라 사이트˜blocked바카라 사이트™) from recovering input tax on goods that are not building materials.

The law

The relevant law is Articles 2 and 6 of the Value Added Tax (Input Tax) Order 1992 (SI 1992/3222). This is colloquially known as the 바카라 사이트˜Blocking Order바카라 사이트™.

How to interpret the 바카라 사이트˜Blocking Order바카라 사이트™

Article 6 of the 바카라 사이트˜Blocking Order바카라 사이트™ does not simply ask whether goods are (or are not) building materials within the meaning given at Note 22 to the Value Added Tax Act 1994, Schedule 8, Group 5. Instead the 바카라 사이트˜Blocking Order바카라 사이트™ has its own definition of 바카라 사이트˜building materials바카라 사이트™ at Article 2. This is necessary in order to enable the 바카라 사이트˜Blocking Order바카라 사이트™ to:

  • exclude from credit for input tax the tax on goods that fall within Note 22 but would otherwise be standard-rated if supplied by a contract builder because the service was not a zero-rated supply in the course of construction of the building
  • allow for eligible goods that are standard-rated because a conversion is taking place but would have been zero-rated if a 바카라 사이트˜new바카라 사이트™ building had been constructed by a contract builder.

Decisions on the 바카라 사이트˜Blocking Order바카라 사이트™ should be approached in the following way:

Step 1 - Will a zero-rated major interest grant be made in the building?

Yes, go to step 2.

No, the 바카라 사이트˜Blocking Order바카라 사이트™ doesn바카라 사이트™t apply.

Step 2 - Are the goods incorporated (VCONST13300) in the building or its site?

Yes, go to step 3.

No (that is the goods are either not incorporated or are incorporated outside of the site), then the 바카라 사이트˜Blocking Order바카라 사이트™ does not apply and input tax is recoverable in the normal way.

Step 3 - Would the service of incorporating the goods be zero-rated if the building were to be constructed from new or, in the case of a non-residential conversion, if that service were being provided to a relevant housing association?

Yes, go to step 4.

No, the supply of the goods would also be standard-rated. The 바카라 사이트˜Blocking Order바카라 사이트™ does not apply and input tax is recoverable in the normal way.

Step 4 - Are the goods building materials within the meaning of the Value Added Tax Act 1994, Schedule 8, Group 5, Notes 22 and 23?

Yes, then input tax is recoverable in the normal way.

No, then the 바카라 사이트˜Blocking Order바카라 사이트™ does apply and input tax is not recoverable.

´¥바카라 사이트”|