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Multiple DIY claims!

11th Oct 2021
VAT Consultant
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I certainly didn’t see this one coming!

The First Tier Tribunal has allowed one claimant to make multiple DIY claims in relation to the same property.

Andrew Ellis and Jane Bromley constructed a new dwelling after the demolition of the existing wooden bungalow. Ellis and Bromley made their first DIY claim when the building itself was completed. A second claim was made two years later to claim VAT on costs in relation to a garden wall, accessway to the property, kitchen and bedrooms (it is unclear precisely what this means!).

VAT Act 1994, s35 allows a person to make a claim for VAT incurred on the construction of a new dwelling, subject to meeting various conditions. There is no restriction on the number of claims which can be made in relation to a dwelling.

VAT Regulations 200 and 201 refer to “a claim,” but do not prohibit additional claims.

VAT claim form VAT 431NB includes guidance notes. These do state, in a number of places, that only one claim can be made. See para 31(c) of the decision.

The Interpretation Act 1978 means that a word in the singular can mean and include the plural unless explicitly provided for. So, “a claim” in Regs 200 and 201 can mean “claims.”

The Tribunal’s key point was that Regulation 201 is ‘ultra vires’ to the extent that it limits the claimant to making a single claim following completion of the building (para 45). Regulation 201 is also ‘ultra vires’ in that it requires evidence of completion before a claim may be made.

The FTT went on to say, as an aside, that neither claim was valid, in that the dwelling was not formally ‘complete.’ It was not complete at the time of the Hearing, which was 2 years later than the second claim, which was itself two years after the first claim (see para 56).

I have no doubt that HMRC will appeal this decision. In my opinion, expressed before, HMRC should instead re-draft s35 and the Regulations so as to provide more clarity to claimants and to be more generous towards claimants.

In the meantime, any claimants who have had a second or subsequent claim rejected by HMRC should re-submit urgently, pending the appeal to the Upper Tier.

This is the FTT decision:

Replies (1)

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Jason Croke
By Jason Croke
18th Oct 2021 13:21

Great case summary Les.

A most unexpected outcome but to be honest, serves HMRC right. They've been playing very fast and loose with DIY claims for several years now, so many claims rejected because HMRC prefer the ambiguity of their guidance to trip claimants over with regard when a property is "completed" or whether a building certificate is or isn't the only allowable evidence.

Agree, HMRC need to refresh their guidance (which isn't the legislation) and the legislation could do with a freshen up too as houses aren't always built in a couple of weeks like HMRC expect them to be.

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