Question

A developer built a care home complex approximately seven years ago consisting of several units of separate purpose-built care homes. A company acquired the SPV which commissioned the care home development after the development was completed. The acquiring company is now seeking to replace the existing cladding using the original developer. Would it be possible to zero rate the VAT for the construction work involved?

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Answer

The aftermath of the Grenfell fire has resulted in policy changes across the construction industry and a number of building owners are in the process of replacing defective cladding.

Depending on the circumstances the work involved may attract VAT at the standard rate or it may be treated as zero rated. There is some material explaining HMRC’s position on...