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HMRC internal manual

VAT Construction

Zero-rating the construction of buildings: are my services supplied ‘in the course of the construction’ of the building: conservatories

The following factors mean that it can be difficult to determine if the services of erecting a conservatory are supplied ‘in the course of construction of a building designed as a dwelling’, and therefore zero-rated:

  • the erection of a conservatory does not always require planning permission and therefore, may not appear on approved plans
  • the decision, or actual work, to erect a conservatory may take place after the construction of the dwelling has taken place. (The work involved in erecting a conservatory is often such that it can be performed at any time with relative ease)
  • the conservatory may be supplied to the developer (such as where they offer optional extras or are prepared to carry out extra works) or the house-buyer:

    • when supplied to a house-buyer the work is often performed between when the developer has made his major interest grant and the date of occupation - developers are often reluctant to allow suppliers contracted to house-buyers on site before their grant has been made
    • when supplied to a developer the finished structure will normally form part of the zero rated grant of the house made by him.

The following table provides guidance on the common scenarios:

Description Liability
   
Conservatory supplier supplies work whilst the dwelling is being constructed Zero-rated. The supply can be to either the developer or house-buyer.
Conservatory supplier supplies work to the developer after the rest of the dwelling is constructed If, whilst the dwelling was being constructed, the developer always intended that the conservatory would form part of the finished dwelling, then it is zero-rated.

Note: This does not include optional extras taken up after completion and assumes no minor interest grants in the dwelling have been made.

If developer’s intention formed after the rest of the building has been completed, then it is standard rated.

Note: These supplies don’t affect the liability of the first grant of the building.    
  Conservatory supplier supplies work to the house-buyer after the rest of the dwelling is constructed but before the major interest grant is made If it is shown on the approved plans, then it is zero-rated.
Note: This does not include optional extras taken up after completion and assumes no minor interest grants in the dwelling have been made.    
  Conservatory supplier supplies work to the house-buyer after the rest of the dwelling is constructed and after the major interest grant is made Zero-rated if the conservatory is on the approved plans and is constructed immediately following the construction of the rest of the dwelling.
Otherwise, standard-rated, even if carried out prior to occupation.  

Sometimes, the erection of a conservatory will span the completion of the dwelling itself.

In cases where only the footings of the conservatory are constructed prior to the completion of a building, then only that work can be zero-rated. The liability of the further work will follow the guidelines in the table above.