In Joe Smithers v HMRC [2020] TC07858, the First Tier Tribunal (FTT) refused a VAT DIY builder's claim on basis that works did not amount to the construction of a building and the previous building had not ceased to exist.

Mr Smithers had incurred VAT on demolishing a property and then re-building it. He retained the front and flank walls and made a VAT DIY Builders Scheme claim of £18,239.15.

The conditions for a DIY claim for a new build is that:

  • The building is constructed from scratch and not incorporating existing building unless it’s an explicit condition in the Planning Permission.
  • It is lawful and the dwelling must not be prohibited from separate use or disposal in the terms of the planning consent.
  • The DIY Scheme reclaim must be submitted within three months of completion.

HMRC argued that the pre-existing property was not completely demolished as parts of it had been retained and incorporated into the 'new' dwelling but not as an explicit condition of the Planning Permission.

HMRC refused the DIY claim on the basis that the work did not amount to the 'construction of a building' as the building originally at that address did not cease to be an existing building.

Mr Smithers appealed HMRC’s decision to the FTT. He accepted:

  • That the existing building had not been demolished completely.
  • He argued that the retention of the double façade had been a condition or requirement of statutory planning consent.
  • The property was a corner site. 

Mr Smithers failed to establish that the retention of the double façade was a condition or requirement of the planning permission and in any event, the property was not a 'corner site'. The appeal was dismissed on the basis that pre-existing property was not completely demolished and hence did not meet the definition of a new build.  


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.

Land & Property VAT at a glance
An at a glance guide to VAT on common land and property transactions.

Structures and Buildings Allowance 
This is a guide to the Structures and Buildings allowance, who can claim, what expenditure is eligible and how to make a claim.

External link

Joe Smithers v HMRC [2020] TC07858