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Unlocking the VAT Advantage in the Property Construction & Development World

27 July 2023
Luke Anderson
Property Owners, Building & Construction, Accounting & Compliance, Property Investors & Developers

In the bustling world of property construction and development, are you ready to use your VAT status to your advantage?

VAT and advantage are two words that may seem an unlikely pairing, however with careful consideration and the right VAT treatment from the start you can really score a jackpot.

So how can you be sure that when you are done building your masterpiece, you have maximised your reclaims and aren’t going to receive any surprise bills?

Bringing the VAT Advantage to life in property & construction

VAT rules can be complicated to say the least and are very much dependent on the particular situation.

It’s all in the detail and being aware of the pitfalls and elements to look out for can lead to significant savings.

Here we explore some real-life scenarios you may encounter, whether personally or while working on a project with a client.

Zero Rated?

Meet Bob, he has been asked to build a completely new building.

That means it is a new build and zero rated right?


Bob forgot to check the fine print – the planning permission reveals the annexe must stay put with the existing property.

That means standard-rated VAT for all works

Bob now finds himself in a bit of a pickle.

He’d already locked in a set price with his client, but now he’s faced with two options: agree to a 20% price increase or swallow the VAT bill himself.


That could seriously dent his profits, and poor Bob might need a piggy bank rescue to keep his business going.

Property Flipping

Let’s shift gears to Trevor, the property developer extraordinaire.

He bought a residential property at an auction with plans to spruce it up and quickly sell it.

Initially, he thought the renovation works would be standard-rated VAT, but guess what?

A hidden treasure popped up when Trevor dug into old council tax records.

The property had been snoozing for 12 whole years,

A VAT goldmine!

Why is this good news for Trevor?

Well, if a property has been uninhabited for a decade or more, any work done to make it habitable again can be zero-rated for VAT.

That’s right; Trevor’s in for some serious savings, and he’s about to flip that property with a very tidy profit!

Partial Demolition?

Now, let’s check in on Bob’s brother, Jack of All Trades.

He’s been tasked with tearing down an old pub and converting it into a home.

Jack, being the thorough professional calls us and we meticulously review the plans with him and his customer.

Surprise twist!

The customer wants to keep the existing back wall intact since it’s undamaged and rebuild the rest of the property around it.

Here’s the kicker: because the old building won’t be completely demolished, the property will no longer qualify as a new build.

We tell Jack he will need to charge a reduced rate of 5% VAT instead of zero-rated.

Armed with this knowledge, Jack and the customer can review the costs and evaluate if it might actually be cheaper to knock down that last wall and make the whole project zero-rated.

Decision time!

Making an informed decision

Now, here’s where we, Friend & Grant can step in and offer a golden opportunity to review your plans and expected works before you even break ground.


Because we want to make sure you’re charging the right VAT and recovering every penny possible!

Provided you are a client of Friend & Grant we offer a free 5 minute property consultation with our VAT expert, Luke Anderson, to determine the VAT treatment.

9 times out of 10 we can tell you the treatment immediately.

However if we spot a VAT opportunity or a VAT threat we can highlight the issue and agree a fee to check in detail the VAT treatment.

Remember, in the whirlwind of property construction and development, a VAT check can be your secret weapon.

Stay informed, reclaim what you can, and avoid those unpleasant surprises.

Let’s build with a smile!

Our services & Who we work with

If you would like to find out more about the services we can offer in relation to VAT, please contact our VAT Consultant Luke Anderson or call us on 01634 731 390.

To find out more about who we work with take a look at our related pages:

Property Investors & Developers

Building & Construction

Blogs related to VAT

Take a look at our other blogs on the topic of VAT

5 VAT Rules you may not know 

Do you need a VAT Health Check?


Disclaimer: This blog post is for informational purposes only and should not be considered professional tax advice. Be sure to consult a qualified expert for personalized assistance with your specific situation

The content in this blog is correct as at 27th July 2023 See terms and conditions.

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