VAT on new build

VAT registered builders constructing their own hom

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I have a VAT registered builder who has built two attached residential buildings. One was subject to a local S108 scheme in order for the development to go ahead. During the build my client has decided he wants one of the properties.

All the costs have gone through the VAT returns as expected. It looks like from Jan 2011 you can't claim through the VAT return on a self build and you have to do a self build return. The reason seems to be because it is not 'business' so not allowed on return, but one property couldn't be built without the other and that was in the course of business, so would this be allowed?

Anyone had any experience of this. It will be soo much easier if the costs are kept on the clients VAT return which was allowed prior to 2011.   

edit

After 1 January 2011, however, this choice is no longer available to him and it will only be possible to recover VAT through his return to the extent that the services and materials will be used for taxable business purposes. Where the house has not been constructed for a business purpose it will not be possible to claim back the VAT through his return. The only option that will now be available to him will be to make a claim through the Refund Scheme.

As the houses are attached and one is being built for profit along with it being under a S106 agreement, so both are being built for a business purpose.

Thinking about it could you even use a DIY self claim in this case?

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chips_at_mattersey
By Les Howard
24th Aug 2016 09:58

This is the link to the HMRC guidance on this point: https://www.gov.uk/hmrc-internal-manuals/vat-construction/vconst24350

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