VAT: Construction of holiday homes
HMRC have announced a change in the treatment of VAT claims under the DIY Housebuilders and Converters VAT Refund Scheme.
Following a recent VAT Tribunal decision, HMRC now accept that the VAT on costs of materials and services supplied in the DIY construction of new holiday homes should be recoverable. HMRC also accept that the same is true for the costs of DIY conversions of non-residential buildings into holiday homes. DIY for this purpose means work undertaken by an individual for non business purposes.
This scheme was designed to ensure that a homeowner building a home can benefit from the rules which allow the qualifying construction costs of new homes and certain conversion works to be zero-rated but until HMRC’s recent announcement, the construction of holiday homes did not qualify.
HMRC, in a move that should please many holiday home owners, have confirmed that they will accept backdated claims providing the certificate of completion was issued within the period from 16 March 2006 and the date of the Revenue & Customs Brief i.e. 15 June 2010.
Claims should be made using either form VAT 431NB designed for new builds or form VAT431C designed for qualifying conversions i.e. the conversion of a non-residential property to residential. All claim forms should be accompanied by planning permission documentation, certificate of completion, building plans and original VAT invoices, bills and credit notes.