VAT Change to Put Up Cost of Social Housing New Builds

HM Revenue & Customs (HMRC) looks set to withdraw a long standing tax break for developers by the back door. Close examination of a draft update of HMRC’s guidance to the construction industry has revealed that its current policy of allowing design/architect’s costs to be provided VAT free, as part of an all in one ‘design and build’ contract to construct a zero-rated building, may be withdrawn. HMRC’s plans to apply VAT to the design element of these contracts will inevitably increase the cost of constructing new social housing, residential care homes and charity buildings. Read more on the PKF website.