DIY housebuilder secures extra VAT refunds

In Steven James Mort v HMRC [2023] TC 8801, the First Tier Tribunal (FTT) partially allowed an appeal under the VAT DIY Housebuilders scheme, finding that items for which HMRC had disallowed a refund on the basis that they should have been zero-rated, had been correctly standard-rated, meaning a refund was due.

To qualify for a VAT refund under the Refund scheme for DIY housebuilders the following conditions must be met when building your own home:

• The works must be lawful.
• The works must not be carried out in the course or furtherance of a business.
• It must be the construction of, or conversion from, non-residential property into:
  • One or more Dwellings.
  • A solely relevant residential building.
  • A solely relevant charitable building.
• The VAT must have been properly charged at the correct rate.
• The VAT claimed must be on construction services (where not zero-rated) and building materials incorporated into the building and not architects, surveyors, consultants or supervisors' fees.

Mr Mort built a house and submitted a claim under the scheme for a refund of VAT totalling £135,672.

• HMRC did not dispute that the property qualified as a dwelling but refused £66,717 of the claim on the grounds that either the items in question did not qualify for relief as they were not building materials, or they should have been zero-rated (and not standard-rated) by the suppliers.
• Following a review, HMRC later accepted that a further £13,824 did qualify. A further review did not produce any additional allowable claims and Mr Mort Appealed.

The FTT partially allowed the appeal and Mr Mort was able to recover a further £16,684 of VAT:

• Some of the items should have been zero-rated as supplies of building services and not standard rated as building materials, precluding a claim under the scheme including:
  • The surfacing of footpath and driveway.
  • Fabrication, supply and installation of steel roof beams.
  • Supply and fit of wooden flooring.
• Some supplies disallowed by HMRC on the basis that they should have been zero-rated were found to have been correctly standard-rated and so were allowed, including:
  • Supply and installation of shutters and roller screen roof system.
  • Supply and fitting of automated gates and insulated garage doors.
  • Manufacture and supply of skirting, staircase components (including installation) and fire doors.
• Certain items were supplies of furniture, not building materials, and fell outside the scope of the scheme. These included expensive wardrobe systems; had they been the materials to construct basic fitted wardrobes however they would have qualified for relief.

Mr Mort was able to supply invoices for all amounts claimed and he and his wife (who represented themselves) gave evidence at the tribunal. A less organised taxpayer would perhaps not have fared quite as well.

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.

Land & Property VAT (Subscriber guide)
An outline of the VAT treatment of some of the more common supplies of land and property.

Land & Property: Dwellings
What is a dwelling for VAT purposes? What is the VAT treatment for the construction, conversion, sale and letting of a dwelling?

External link

Steven James Mort v HMRC [2023] TC 8801