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Financial Monitor (September 2006)

VAT on property conversions
The conversion of domestic property as opposed to the building of new domestic property is treated harshly for VAT purposes. Whilst new building is largely free of VAT, refurbishments (unless the building is listed) are subject to VAT.

To ease the position the Government introduced a new lower rate of VAT of 5% in 2001 which can be applied by the builder in certain circumstances. This can be particularly helpful to those in the domestic buy-to-let market who can never recover VAT they incur.

The 5% rate can only be applied by the builder carrying out the work, it cannot be obtained on materials obtained without related services. The reduced rate can be applied in the following circumstances:

converting a non-residential building into a residential building, eg. a barn or warehouse conversion
changing the number of ‘single household dwellings’ within a property, eg. converting a large old house into four flats or converting bedsits back into a single house
converting flats or houses into bedsits
refurbishing a residential property that had been empty for three years or more.

The 5% rate cannot be applied to the construction of extension or “granny flats”.

Many builders seem unaware of the lower rate so if you believe you qualify and you cannot convince the builder, please contact us and we will provide the reassurance the builder requires.

Police crackdown on firms 'mobile' phone policies
We understand that the employers of those caught talking on a hand-held mobile telephone whilst driving may be interviewed by the police regarding their mobile ‘phone policies. The employers may then be prosecuted using Health and Safety law. It is therefore important that employers have proper written policies in place regarding mobile telephone usage which ensures their employees operate within the law.

Fire safety at the workplace
The Regulatory Reform (Fire Safety) Order 2005 comes into effect from 1 October 2006. This revokes much of the previous fire safety legislation and removes the need to have a fire certificate.

The legislation introduces the requirement for a responsible person (normally the employer) to carry out a fire risk assessment and where there are five or more employees to make sure that the key points of the assessment are recorded. Potential risks so identified must be eliminated or reduced as far as possible and fire precaution measures put in place to minimise the effect of any remaining risks.

It is important to make sure that the new legislation is fully complied with, not only to minimise the possibility of harm to personnel and damage to premises, but also to ensure as far as possible that any insurance claims are fully met. Insurance companies may refuse to pay claims where there has been lack of compliance with the legislation.

The responsible person must take steps to not only identify the possible fire hazards in the premises but also to consider the fire safety of all those who might be in the premises when fire breaks out, especially the vulnerable, such as children, the elderly and disabled.

The fire risk assessment will require:

Identification of the hazard
Focus on the safety of personnel
Evaluation of the risks
Documentation of the hazards
Regular review

Different types of business will have different types of operating practices to be taken into account when carrying out a risk assessment. The Department for Communities and Local Government has produced a number of guides covering different premises. These can be downloaded from the Department’s website at www.communities.gov.uk

National Minimum Wage
The rate will increase from 1 October 2006, the adult rate (age 22 and over) will rise from £5.05 to £5.35 per hour, the development rate (age 18-21) from £4.25 to £4.45 per hour and the rate for workers aged 16-17 will rise from £3.00 to £3.30 per hour.

Workers aged 22 and above, starting a new job with a new employer and undergoing training leading to a vocational qualification may be paid at the development rate of £4.45 per hour.

Protect your identity – beat hi-tech thieves
Identity theft affects more than 100,000 people every year and armed with just a few of your personal details a criminal can open up bank accounts, obtain credit cards, claim benefits and apply for official documents such as driving licences in your name. Protect yourself by:

shredding all personal information before binning it
deleting suspicious emails requesting personal information
being extra vigilant when giving out personal information on the telephone or by email
notifying Royal Mail if you suspect your mail is going missing.
You may have become a victim if:

mail like bank and credit card statements suddenly stops arriving
rubbish bags are tampered with or missing
you receive bills for things that you have no knowledge of buying
irregular direct debits or payments appear on bank statements.

If you think you have become a victim notify the police immediately.

Spanish holiday footnote
For Sale: 2 large Villas with private pools near Moraira on the Costa Blanca. Both have separate apartments on 1st floor and one has been a B&B. Spanish-resident English owners. Partner, Derek Hemmingfield is contact with both owners.

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