A DIY Housebuilder is entitled to reclaim VAT suffered on building their new home. HMRC has always maintained that a DIY housebuilder is not entitled to make interim claims, must wait until completion of the project, and must then claim within 3 months after completion.
The First-Tier Tribunal has recently ruled that HMRC should permit interim claims. Unless this Decision is overturned on Appeal, this could be a very welcome development, particularly since HMRC has been taking an unreasonably long period to process and pay claims.
Mr Ellis and Ms Bromley spent 5 years constructing a new home at weekends and on holidays. They made an interim claim for repayment of VAT which HMRC, misinterpreting whether the building was complete, duly repaid. At this stage, noted the Tribunal, it would have been obvious that significant works were outstanding, because there were no claims for things like kitchen and bathroom fittings.
The taxpayers submitted a further claim 2 years later, for materials purchased since the previous claim. At this stage, the building was still not 100% complete, and a Building Control Completion Certificate had not been obtained.
While several other Tribunals have determined that the Building Control Completion Certificate is the right evidence for completion, when determining time limits, HMRC has regularly relied on other evidence of completion if it enables them to argue that a claim is "out of time."
The Tribunal rejected HMRC's argument that the building was complete at the time of the first claim which would have meant the second claim was "out of time".
It also rejected HMRC's reliance on their own rules that specified only one claim could be made. It may be that HMRC will Appeal this point on general principle, in case it leads to more challenges to their ability to make Regulations.
Personally, I hope HMRC not only accepts this decision, but agrees to staff its DIY claims team properly. The UK has long wanted to encourage widespread home ownership, and the DIY reclaim scheme is intended to help facilitate this. It cannot be helpful if a DIY builder has to wait many years until the building is fully complete before making a claim, then wait many months before HMRC get round to repaying the money owed.
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