A special VAT Refund Scheme allows DIY house-builders and people converting non residential buildings into dwellings to reclaim VAT incurred on construction or conversion costs. This scheme is available when the building will be used for a non-business purpose. Constable VAT can advise on alternative options where a building is intended for business use.

Our clients are currently experiencing delays in receiving repayments from HMRC even in fairly straightforward cases. Please take this into account when preparing and submitting a claim. If there is an urgent need for funds to be released please speak to us as a recent VAT case has given rise to a potential opportunity to make more than one claim during a build and it may be possible to make a claim during the build.

Although builders’ services in connection with the construction of a new dwelling are likely to be zero-rated, VAT will be incurred on any materials purchased directly by the owner.

Where a non-residential building is converted into a dwelling zero-rating is unlikely be available and construction costs are likely to carry VAT at 5%.

Under the DIY scheme, HMRC must refund any VAT chargeable on the supply, acquisition or importation of any building materials used in connection with qualifying construction or conversion work.

The scheme can be used to reclaim VAT on eligible goods used to construct a new qualifying dwelling, communal residential building or charity building and eligible goods and services used to convert a non-residential building into a qualifying dwelling or communal residential building. Claims must be completed and submitted within a strict time limit and this can be difficult to meet when combined with the other challenges a self-build or conversion offers.

We can advise on complex legal points that may prevent a successful claim as well as preparing and submitting a DIY claim on your behalf to help secure the maximum VAT refund on a given project. The VAT Tribunals deal regularly with cases involving rejected DIY claims and recently we have seen an increase in claims rejected because HMRC considers them to be ‘late’. Constable VAT keeps a close eye on these cases and is well placed to assist if your claim is rejected.

HMRC issued a Revenue and Customs Brief 8 (2022)  following the FTT decision in the case of Andrew Ellis and Jane Bromley. This Brief  clarifies that fact that it is HMRC policy that only a single claim is allowed under the DIY Scheme and this has not changed following that decision. However, where it is agreed that a claim has been repaid in error, HMRC will accept a subsequent claim with evidence that the claim has been made within 3 months of completion.

For further advice or help, please get in touch.

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