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Changes to VAT Application for Scottish Water RCC Payment

As of 1 April 2019, Scottish Water is changing its payment terms in relation to the VAT application on Reasonable Cost Contribution (RCC) to be in line with HMRC guidelines for standard rating of asset payments.

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As of 1 April 2019, Scottish Water is changing its payment terms in relation to the VAT application on Reasonable Cost Contribution (RCC) to be in line with HMRC guidelines for standard rating of asset payments. This change will affect any application within the facilitation process from this date. The facilitation process is the connection of developer-constructed assets that transfer into Scottish Water ownership.

From 1 April 2019, VAT will be applied to all Financial Reimbursement Agreements (FRAs), including to the RCC element claimable by the applicant/developer for any Facilitation Application after this date. Any Facilitation Application received prior to this date will not be subject to the VAT application changes.

There is no change to the way in which RCC reimbursement is claimed, and all necessary assets within a Facilitation Application will still require to be successfully vested in Scottish Water prior to any claim being paid.

A developer will only be paid RCC once a Transfer Certificate has been issued by Scottish Water, relating to the assets associated with the RCC Claim, and Habitation Certificates have been supplied.

Developers can still apply for RCC with a minimum of five Habitation Certificates per application as long as a Transfer Certificate has been issued by Scottish Water.

The number of Habitation Certificates supplied will be paid in full and no retention will be held.

When are we doing it?

Any Facilitation Application technically audited from 1 April 2019 will be subject to VAT application in relation to the FRA and RCC.

Further information can be found in the Vesting of Developer Constructed Assets Policy

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