VAT reliefs on replacement cladding

Adam Cutler, Director, VAT
Following the Grenfell tragedy many organisations are replacing the cladding on their buildings. HMRC has confirmed that these works may qualify for VAT relief.

Since the Grenfell tragedy housing associations and other residential landlords have been urgently reviewing their properties to see whether their own cladding needs replacing. Where remedial work is required, HMRC has now confirmed that this may be eligible for VAT reliefs in certain circumstances.

In what circumstances can you claim?

  • Where the property owner commissioned the construction of the building, and the original cladding was part of this construction process, then the remedial work can be treated as snagging. These services would be zero-rated.
  • Where the cladding was installed as part of a conversion project, then again the remedial work could be treated as snagging if the property owner has not altered. This work might be subject to 0% or 5% VAT, depending on what rate applied to the original conversion works.
  • HMRC has also accepted that re-cladding works may qualify for the 5% VAT rate in other cases where the cladding’s main purpose is to insulate the building, rather than to enhance its looks.

Other types of buildings that may qualify

Although the position is more complex, similar VAT reliefs may apply to works to:

  • community centres
  • halls of residence
  • care homes.

Further support

HMRC is not planning to publish any guidance on these issues, but has confirmed this policy in formal minuted meetings with sector representatives, as well as a number of individual rulings we have seen.

To discuss these issues and how they apply to your organisation, please contact Adam Cutler, Director, VAT.

Contact us

Adam Cutler
Adam Cutler
Director, VAT and Customs Duty Services