The construction of a new commercial building is subject to the standard rate of VAT. Zero-rating applies to the construction of new qualifying dwellings; approved alterations to dwellings which are listed buildings; and the construction of a relevant residential or relevant charitable purpose property (provided certain conditions are satisfied). The reduced rate applies to qualifying services supplied in the course of renovations and alterations of dwellings which have not been lived in for a period of at least two years; and the conversion of a non-residential property into residential use. When planning a construction project, it is key that businesses understand what it is they are trying to achieve and consider whether an alternative approach could provide a lower overall VAT cost, or an enhanced cash-flow position.