It may have gone unnoticed by some in the construction industry,
but HMRC very nearly pulled a fast one over the summer. In a move
described by one commentator as "a moment of madness",
design and build contracts may suddenly have become a lot more
expensive to run.
HMRC have adopted a strategy in recent years of
"re-interpreting" tax legislation so as to maximise
revenue. One of the areas recently identified as suitable for
"reinterpretation" was design and build.
Historically, HMRC has accepted that professional services
supplied by a building contractor along with the building works
attracted the same VAT liability as the works themselves. So, for
example, architects' and surveyors' services provided in
connection with new build accommodation would be zero-rated. This
is because those professional services, although usually
standard-rated, become subsumed in a construction contract so that
only the construction element actually exists as a product at the
end of
