In Daniel Dunne v HMRC [2023] TC8716, the First Tier Tribunal (FTT) denied a DIY housebuilder a VAT reclaim. The building created was considered an extension by the underlying planning application and not a separate dwelling.

  • Mr Dunne submitted a DIY Housebuilders VAT reclaim for building work completed on his property:
    • Mr Dunne submitted a planning application for a single-storey rear extension to his residential property in 2016.
    • The extension ended up being separate from the main house as a linking corridor was not built, but the planning permission was amended informally.
    • A Building Control Completion Certificate for the single-storey rear extension was issued in July 2019.
  • HMRC rejected the claim on the basis that the works were not in the construction of a new dwelling for VAT purposes.
  • Following a Statutory Review, Mr Dunne Appealed to the FTT.

The FTT found:

  • A VAT reclaim was only possible for the:
    • Construction of buildings designed as dwelling(s).
    • Construction of buildings for solely residential purposes.
    • Conversion of non-residential buildings into dwellings.
  • A VAT reclaim required the planning permission granted to be for a dwelling. This was not the case as:
    • The planning permission was for a single-storey rear extension, not a separate dwelling.
    • The informal amendment to the planning permission was not considered to create an additional dwelling, the building was referred to as an ‘extension not attached to the main house’ thereafter.
    • Extensions were precluded from qualifying for the DIY housebuilders scheme.

The appeal was dismissed

Useful guides on this topic

Land & Property: 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. This recovery can arise under the special refund scheme for DIY housebuilders.

Statutory Review (by HMRC)
What is a Statutory Review? Is it automatic? What happens in a Statutory Review? Can you challenge a Statutory Review's findings? Can you influence a Statutory Review? 

How to appeal an HMRC decision
Disagree with an HMRC decision? How to appeal, what type of decision can you appeal and what are your different options when you disagree with HMRC? What are the key steps in making an appeal?

External links

Daniel Dunne v HMRC [2023] TC8716


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