Good news for DIY home builders – expert VAT advice
Advice from John Kerr Chartered Accountants and property tax experts
Words by David Glover | Advertorial
Q: My husband and I are considering building our own dream home. We have recently purchased a plot of land with planning permission and will hope to start to build soon. It seems very unfair that the materials we need to build our house, some of which are expensive imported tiles from the continent, have 20% UK VAT charged on them. If we employed a building firm to do the work, they tell us that they would not need to charge us the VAT. Is there anything we can do?
A: Good news! A special VAT scheme puts DIY builders and converters in a broadly similar position to a commercial developer selling a new domestic property, by refunding them the VAT on their main construction or conversion costs.
As well as applying to do-it-yourself builders, people who buy and convert a commercial building to residential use can also qualify, as can people who buy a part completed house and finish it themselves
As with any HMRC scheme these days, there are a whole raft of conditions and rules you will need to follow, but a lot are plain common sense. You will need to be well organised and collect & process the right paperwork at the right time. As with most successful property developments you will need to plan to achieve the right result which in your case should be a sizeable VAT refund.
Q: That’s great! Can we get the refunds as work progresses?
A: Unfortunately that’s not how it works. The rules say that you can only make your claim after the completion of the construction. You will usually need to claim within three months and your claim form (with the supporting documents) needs to be sent to HM Revenue and Customs for them to process. All being well, you can expect your refund within 30 working days.
Q: Aren’t HMRC forms complicated and difficult to complete?
A: If you are not used to completing forms such as that required, you can always seek assistance from a good accountancy firm who regularly deal with such matters.