Many growing businesses, under pressure from growing resources, undertake an office move to a larger premise. However, moving offices is not only extremely expensive, but also time consuming and disruptive for all employees. The alternative is to extend the business premise, which may seem simple, but is often overlooked.
Extending a company’s office space is obviously not viable for all businesses. However, for those that are able and have the relevant permissions, it can be a lot more cost effective than a complete move.
When extending a business, all of the work is contracted out. Other than negotiating the best price, there is nothing that can be done to decrease the construction costs. However, something can be done about the VAT you have to pay on top.
Claim your VAT back
Registered businesses can reclaim any VAT they pay on their return forms. This is a huge advantage for registered businesses that are able to extend their premises in order to gain the extra space that they require. The only disadvantage is that the construction costs would need to be paid up front, which can severely affect cash flow.
Reduced or zero VAT rate
The standard VAT rate is applied to the vast majority of construction work, mainly through labour and materials. It is always advisable to ask your contractor what work would generate a reduced or a zero rate of VAT. The type of work that qualifies is limited, but it is always worthwhile to ask.
Using non-VAT registered trades people
Exempt and partially exempt businesses are unable to claim VAT back; therefore, the best solution here is to use non-registered trades people. This way businesses can guarantee that they will not be charged VAT, reducing the overall construction costs.
If you or someone in your business is construction savvy, the most cost efficient way is for you, yourself, to manage the build. This is ideal for small extensions that do not require much management. However, for larger construction work, managing your own project can be extremely stressful.
The alternative is to employee a project manager. This can either be internally, or through a contractor. This way you will not have the pressure of managing the build yourself, but will be able to pick the trades people you use, again reducing the amount of VAT you will need to pay.
Simple solutions for growing your business.