In Roy Tabb v HMRC  TC6870 a DIY Housebuilder successfully challenged HMRC's interpretation as to whether the demolition and rebuild of an annex resulted in a new dwelling or was merely an extension.
VAT DIY housebuilder refunds can only apply to newbuild properties; conversions, alterations and extensions don’t qualify.
- A farmer built a new house where an annexe to a barn had stood. Although the annexe was demolished to ground level, the barn itself wasn’t removed.
- HMRC denied the VAT claim arguing that the conditions for VAT refund had not been met.
The FTT agreed that the new property was an extension or enlargement of the prior building however that also created a new dwelling and the claim was allowed.
Useful guides for our subscribers
VAT: DIY Housebuilders Scheme
It is possible to recover VAT on constructing a new residential dwelling, or dwellings, even where there is no planned sale of the property.
What is the VAT treatment for construction, conversion, sale, and letting of a dwelling?
VAT: Land & Property: At a glance
Handy guide summarising which rate of VAT applies to what type of build project