VAT Considerations For Self–Builders

From time to time we publish articles from guest experts.

Today’s article is from:

Les Howard – Freelance VAT Consultant (www.vatproblems.com)
A person may construct his own dwelling, reclaiming VAT on the materials. This scheme cannot be used for a person constructing a dwelling for investment. The scheme only applies to a person constructing a house for occupation. The scheme also applies to the conversion of a commercial building to a dwelling, such as a barn conversion.
The scheme puts the private person in (nearly) the same position as the commercial house-builder. His construction of his own house is effectively VAT-free. However, he cannot recover VAT on any services:
·Services of construction should be zero rated in any case; the applicant must tell any sub-contractors not to charge VAT;
·He cannot recover VAT on professional fees;
·He should not be charged VAT on the purchase of land. If the vendor wishes to charge VAT, then the applicant should take advice to alter that.
Formal registration for VAT is not required. HMRC have published a pack of information, VAT 431. This contains much useful and important information. I would suggest that the applicant obtains this pack as early as possible.
The pack also provides details of what information needs to be presented to HMRC. This includes a full list of all purchases and VAT to be claimed, details of quantities of materials used. You will also need to provide a copy of planning permission, plans, and certificate of completion.
A single claim is made once the project is completed. This means that the applicant has to fund the VAT for the duration of the project. Notice that the claim has to be submitted within three months of completion.

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