DIY Housebuilder Scheme: When is A Building Complete?
Constable VAT has been able to assist many DIY builders who have had claims rejected and can help by drafting letters to HMRC and appealing decisions to Tribunal. In the recent case of Andrew Fuller, our client was successful in representing himself at Tribunal with assistance from Constable VAT.
In the case of Andrew Fuller, Mr Fuller received planning permission in May 2006 to build a dwelling with an attached garage. Between 2005 and 2016, Mr Fuller purchased materials and associated services relating to the construction of the new properties; however, only four invoices were dated later than 2 November 2011. A DIY claim was submitted on 11 January 2019, following the receipt of a certificate of completion on 4 January. HMRC rejected the claim on the grounds that it was outside of the three-month time limit to make such a claim.
Mr Fuller moved into the property in 2010, although it was not completed in accordance with the planning consent and the garage was still to be constructed. Owing to financial restrictions, by December 2018 Mr Fuller had decided to not go ahead with the construction of the garage and applied for a certificate of completion in January 2019, accepting that the garage would not be built and that the project was “complete”. HMRC rejected the claim and argued that the building had been completed in 2010 when Mr Fuller occupied the property.
The Tribunal considered the question of when a building is “complete” for the purposes of the DIY Housebuilder Scheme. In considering this question, it observed the way in which the Tribunal had approached the issue in the cases of Farquharson and Liam Dunbar. It was observed that in Dunbar, it was held that the issue of a certificate of completion is when the building is to be regarded as complete for the purposes of the DIY Housebuilder Scheme. It was commented in Farquharson that “It is reasonable to assume that in the normal course of events, a housebuilder will make a claim at the earliest possible juncture…”
As Mr Fuller intended to build the garage at the time when he occupied the property, he did not submit a claim as he would have forgone a right to VAT recovery on the construction costs of the garage. This is because of the condition that only one claim can be submitted per DIY project. It had always been Mr Fuller’s intention to submit a claim as soon as possible and once he had decided to not complete the construction of the garage, he submitted a claim.
Moreover, Mr Fuller carried out further work to the property after he moved in as is evidenced by the invoices which form part of the claim which are dated up until November 2016. If HMRC had been correct that the property was complete when occupied, Mr Fuller would have forgone this additional VAT as well as the VAT on the construction of the garage.
The Tribunal held in favour of Mr Fuller, noting that the project was not complete when he moved into it as the planning permission allowed for the construction of a garage which did not take place. When it was decided that the garage would not be built, a certificate was issued and a claim was submitted within three months.
This is another judgment in a long line of decisions which suggests that, for the purposes of the DIY Housebuilder Scheme, the starting point for deciding when a property is complete is the issuing of a certificate of completion. That said, each case must be judged on its own facts which are specific to it. It is always worth seeking professional advice when initially considering the project rather than when it may be too late.