VAT – Zero or 5% VAT for building works?
Following the introduction of Permitted Development Rights
HMRC has clarified its policy concerning the VAT treatment of works where an individual planning application is not necessary because statutory planning consent (SPC) has been granted though Permitted Development Rights (PDRs)
HMRC will continue to require evidence to be produced that the work is lawful in order for the zero or reduced rate of VAT to apply or for a claim to be eligible under the DIY House Builder Scheme. Where the builder, developer or DIY House Builder Scheme claimant establishes that the conversion is covered by a PDR and individual SPC is not required, they must be able to evidence it by at least one of the following:
a) Written notification from the Local Planning Authority (LPA) advising of the grant of prior approval, or
b) Written notification from the LPA advising that prior approval is not required, or
c) Evidence of deemed consent (i.e. evidence that you have written to the LPA and your confirmation that you have not received a response from them within 56 days) and evidence that the development is a permitted development. This will include all of the following (where the documents have been created), plans of the development, evidence of the prior use of the property (e.g. evidenced by its classification for business rates purposes etc.), confirmation of which part of the planning legislation is relied upon for the development and a lawful development certificate where one is already held.
Developments carried out under a PDR must still meet the appropriate building standards. Should any circumstances arise where building control is not required, evidence from the local authority confirming this should be provided.