Success story
Construction VAT Reclaim Unlocked £30,000 For A UK Builder
Reading time: ~3 minutes
£30k Back, Zero Stress
In August 2024, a residential home builder in Stourbridge asked us to sanity-check VAT on new-build costs. They suspected suppliers had applied the wrong VAT rate and wanted clarity before making corrections.
Zero-Rated or Not? The Crucial Distinction
Some costs relating to the building of new homes can be zero-rated, but only when specific conditions are met. In new build construction, small details change everything: what are “building materials," what are "goods," and how do you treat "installation costs"? When does zero rated VAT actually apply?
Why It Mattered
For housebuilders, cashflow is critical. Even small VAT errors across multiple plots can add up to large sums. Our client had been billed standard rate across a mix of items and needed clear, reliable advice to confirm where VAT had been overcharged and how to put things right with suppliers.
Our 3-Step VAT Review
- Map The Rules: We reviewed HMRC VAT guidance and VAT Act 1994, clarifying construction VAT rates across goods, services, and materials, clarifying which items should have been zero-rated and which should have carried standard VAT.
- Make It Practical: We delivered a clear five-page report with itemised findings, setting out the correct VAT treatment for each category in plain English.
- Make It Count: We set out how to request credit notes and adjust VAT returns using HMRC’s Notice 700/45, turning guidance into money back.
Clarity To Negotiate Confidently
Armed with our report, managers negotiated with contractors and suppliers, confidently separating zero-rated items from standard-rated ones. On 17 January, their financial controller emailed us saying:
"We have completed our work [since your VAT report] and are in the process of reclaiming £30k into the business. So just wanted to say thank you. We are now working on the [other] VAT elements [of your report]."
From Stourbridge To Nationwide
Though the case began in the West Midlands, our clients work with us remotely across the UK. If you need a VAT specialist Stourbridge or beyond, SCCS delivers big firm level expertise at a small firm price. For fully insured, responsive, and plain-English construction VAT advice you can act on, get in contact today or explore our wider tax accounting services for companies.
Ready For Your £s Back?
If you suspect your suppliers are mischarging, don’t leave cash on the table. We’ll review your invoices, apply the rules, and help you secure corrections quickly, just like this £30k success. Speak to SCCS about construction VAT reclaim today and move forward with confidence.
FAQs On construction VAT Reclaims
Can I claim VAT back on new build construction?
You can reclaim VAT only on costs where VAT has actually been charged and you are entitled to recover it as input tax. In many new build cases, eligible building materials and services should be zero-rated at the outset, meaning no VAT should be charged in the first place. Problems arise when suppliers apply the wrong rate, and this is where a reclaim may be needed. Reviewing invoices against HMRC VAT Notice 708 helps confirm which items qualify as zero-rated and which can be reclaimed.
What building work qualifies for 0% VAT in the UK?
Zero-rated VAT applies to the construction of brand-new residential dwellings, but only when certain conditions are met. This usually excludes professional fees, landscaping, and fittings not classed as “building materials.” Understanding where HMRC draws the line is essential for avoiding overpayment.
Do I need an accountant to help with a VAT reclaim?
While you can submit a reclaim yourself, many builders and contractors prefer to use a VAT specialist. An accountant can review invoices, apply HMRC’s complex rules, and make sure claims are correct before you approach suppliers or HMRC. This often speeds up the reclaim process and reduces costly errors.
Our article on splitting a business to avoid VAT also shows why it’s worth getting expert advice before making important VAT decisions.