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VAT and landfill grants

20 June 2014

We have started work on a large building project, and we are trying to claim back the VAT as we go along. First, we were unable to reclaim VAT on fees until we had a contractor's invoice for those particular works; then, we were asked for budgeting information that we do not have. In order to claim our Landfill Community Grant, we seem to have to provide information that it takes a building professional to produce. It all seems very top heavy after the straightforward way that payments were made a few years ago.

FIRST, on VAT: the process, although it is fundamentally the same as in the past, has been made more complicated. On a current building project, my local church has had to ask the quantity surveyor to produce an extra budget that is aligned to the agreed tender, in order to send it to the Listed Places of Worship Grant Scheme to reclaim the VAT.

It is tedious, but you get the money. If you really are stumped, contact the office of the Grant Scheme, and ask for explanations of what you need to produce.

What is more problematic for bigger projects is a related issue: VAT will not be repaid on fees until the contractor's first invoice is in. You have only one year from the invoice date to claim the VAT on it.

For big repair projects, such as those in the Heritage Lottery Fund's Repair Scheme for Places of Worship, there will, more than likely, be at least a year between the first commissioning of your architect, and receiving an invoice for works done. Before you get to a position of having out-of-date invoices against which you want to make a claim, contact the Grant Scheme for advice on what to do.

The second question is, I suspect, a matter of auditing by the landfill charity. On the whole, the landfill funds are paid towards actual works to the building, and not for VAT, preliminaries such as scaffolding, and insurance, and even then the grant may be allocated to specific items on the building programme.

In this case, the grant-maker's auditor will be required to check that the money given to the church is spent only on the items for which the grant was given. As a result, the invoice from the contractor may need extra detail. Usually, contractors' invoices state simply that a given value of work has been completed (agreed by the contractor's quantity surveyor, and the church's architect or quantity surveyor), and is a one-line total.

Now it may be necessary to show what has been spent on various elements. Then the grant-maker can tie this in with the amount allowable in its grant offer. My local church may again provide a model: its quantity surveyor produced a summary of work achieved and chargeable for the month, and the contractor then produced it on his headed paper, along with the invoice. If your project does not have a quantity surveyor, ask your architect for the breakdown that he or she used to agree the payment with the contractor.

Sometimes this kind of re-presentation of detail can be not only difficult but wearisome. I find encouragement by putting the value of the grant against my time: "The two or three hours I spend getting this paperwork together will earn the church £11,000." That is as good a return on the effort as I could hope for.

Send issues and questions to maggiedurran@virginmedia.com

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