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VAT rate for renovation of a building housing an exempt service

Q: My client is a decorator. He has been engaged by the local GP surgery to redecorate and repaint all in the internal walls and woodwork. My client quoted 20% VAT but the surgery is claiming that because it provides exempt services it shouldn’t be charged VAT? Is this correct?

A: No. What supplies the recipient of decorating services makes is irrelevant and has no effect on the VAT liability of those services. The fact that the customer is providing exempt services does not mean that it itself is exempt from ever being charged VAT (although may mean it cannot recover all, if any, of this VAT). Your client is undertaking decorating services on an existing property and therefore is correct to quote VAT at 20%.