The increase in the rate of VAT applicable to supplies of buildings and building services from 10 per cent to 12.5 per cent applies to all such supplies made after 1 March 1993. There is no provision that would have the effect of applying the increased rate retrospectively to supplies made before that date.
As a general rule, the date on which a contract is entered into is not a factor in determining the date on which a supply is regarded as being made for VAT purposes. A building is deemed to be supplied to the extent that it is paid for or when it is handed over. The date on which a building is deemed to be supplied is determined, therefore, by reference to the date on which any deposits or progress payments are paid, up to the point at which the completed building is handed over. This rule applies not only to buildings but to supplies of goods and services generally. For example, where a building is under construction and part payments are being made, those part payments made before 1 March are liable at the 10 per cent rate, while those made after that date are liable at the 12.5 per cent. Similarly, where a deposit is paid before 1 March and the building is handed over after that date, the deposit is liable at the 10 per cent rate while the balance is liable at the 12.5 per cent rate.
