Work on replacing dangerous cladding on high rise buildings throughout the country could be accelerated hugely and made cheaper if the Government removed VAT charges for cladding and dropped a proposed tax on developers , say leading tax and advisory firm Blick Rothenberg.
Heather Powell, a partner at the firm, and Head of Property said: “The Government, Homeowners, Developers want the cladding that puts high rise homes at risk to be replaced as soon as possible, but the Government is missing two easy solutions that could make the works required more affordable, and accelerate the works.”
She added: “The UK Government has, post Brexit, control of what products and services VAT is applied to. The costs of sorting out the cladding are all subject to VAT at 20% – a charge that the Government can easily remove. This would be a significant reduction in the cost that Leaseholders must pay for the works.
“It is time for the Government to use some of the powers that Brexit has given to resolve problems in the UK.”
Heather said: “Major developers who have shown that they are willing to step up to the mark and undertake the remediation work required on flats they built have been told that they will be required to pay a Developers Tax from 2023.
“Is it in the best interest of the shareholders of these companies (to whom the Directors’ report) to continue with the remediation works and pay the Developers Tax? A hard headed financier could argue that the remediation works, which the companies are not legally required to pay for, should be cancelled, saving the companies millions.”
She added: “If this policy was adopted the misery of the buyers of the flats would be extended – and compounded by increased financial liabilities. The best solution is for the Government to make it clear that developers who have completed all remediation works on flats they have built where there is a cladding problem by 2023 will be exempt from this new tax. Leaseholders will be delighted, and developers who have taken their social responsibilities seriously will be rewarded.”
Heather said: “The cladding crisis has already gone on far too long. The Government can accelerate the solution – and really encourage developers to sort out the problem, by taking these two simple steps.”