DIY House Builders and making a claim
The process of building or converting a property can be costly, and the VAT implications can add to the already substantial expenses. Fortunately, a special DIY house builders VAT Refund Scheme is available for house builders and another for those converting non-residential buildings into dwellings. This scheme allows eligible VAT self build individuals to reclaim VAT incurred on construction or conversion costs, but it is important to note that it is only applicable when the building will be used for a non-business purpose.
VAT consultants for DIY house builders
At Solve VAT, we understand that the DIY house builders scheme can be complex and confusing, which is why we offer our VAT expertise to help our clients secure the maximum VAT refund on their projects. We advise on complex legal points surrounding VAT self build that may prevent a successful claim and also prepare and submit the DIY house builders claims on behalf of our clients.
When it comes to builders’ services, they’re usually zero-rated in connection with the construction of a new dwelling. However, if the owner purchases materials directly, VAT will be incurred on those items. Similarly, where a non-residential building is converted into a dwelling, zero-rating is unlikely to be available, and construction costs are likely to carry VAT at 5%.
How long it takes HMRC to process DIY house builders claims
Claims online
HMRC will write to you within 2 weeks to tell you your DIY house builders claim reference number. HMRC may also ask you any questions they have about your claim.
We understand that HMRC aim to process a claim within 3 weeks after they have received all information needed from a claimant. If a DIY house builders claim is successful, HMRC will write to tell you when you can expect to receive your VAT refund from the National Payment Centre.
Claims by post
HMRC will write to you within 4 weeks to tell you your VAT DIY housebuilders scheme claim reference number and they may also ask you any questions about your claim. HMRC aim to process a claim within 6 weeks after they have received all of the required information.
Claims rejected or not paid in full by HMRC
If a DIY house builders claim is rejected or not paid in full, HMRC should tell you the reasons why. If you do not agree with the decision provided by HMRC, you can either:
- ask for the decision to be reviewed by an HMRC officer not previously involved in the matter
- appeal to an independent tribunal
If you ask for a review you can still appeal to the tribunal after the review has finished. Our VAT specialists can assist you in this process.
VAT penalties
DIY house builders should take care when preparing a claim as an incorrect claim can result in one of a number of VAT penalties. DIY house builders need to ensure that they have been charged VAT at the correct rate as a claim for a supply charged at an incorrect rate could be disallowed possibily resulting in HMRC seeking a penalty. Other issues that may cause problems can, for example, relate to the terms of the planning permission or that the intention for the dwelling is for business use.
Penalties and costs arising from a DIY house builders claim were considered by the Tribunal in the case of Christopher Swales.
Time limits
It’s important to note that claims for the DIY house builders VAT Refund Scheme must be completed and submitted within a strict time limit, which can be difficult to meet when combined with the other challenges that come with self-build or conversion projects. Our team at Solve VAT is well-versed in this area and can guide our clients through the DIY house builders process.
We keep a close eye on the VAT Tribunals’ decisions, particularly those involving rejected DIY house builders claims. In response to this HMRC issued Revenue and Customs Brief 8 (2022) https://www.gov.uk/guidance/vat-refunds-for-new-builds-if-youre-a-diy-housebuilder clarifying their policy that only a single claim is allowed under the DIY house builders Scheme. However, where it’s agreed that a claim has been repaid in error, HMRC will accept a subsequent claim with evidence that the claim has been made within three months of completion.
Our VAT consultants for the DIY housebuilder scheme always strive to provide our clients with the most up-to-date and relevant information to ensure they receive the maximum VAT refund available.
Contact us today on 0161 883 2120 to discuss your DIY house builders VAT refund claim or any other VAT-related matter. Making a claim using one of our VAT expert team can be easy with fees starting from £300 + VAT.
The legal basis for a claim is provided for in section 35 Value Added Tax Act 1994 (“VATA 1994”).