ABSTRACT
Value Added Tax (VAT) is a tax on the consumption of goods and services. VAT must be accounted for on all taxable supplies made in the course or furtherance of business with the corresponding recovery of VAT on expenditure incurred. The supply of building materials is VAT standard rated at 20%, however, where these materials are supplied and installed as part of the construction services the VAT liability of those materials follows that of the construction services supplied. A reduced rate of VAT of 5% is paid on the supply and installation of certain energy saving materials including insulation, draught stripping, central heating, hot water controls and solar panels in a residential building or a building used for a relevant charitable purpose. The VAT liability of the trade contractors will be determined by the nature of the construction services they provide and the building being constructed.
