In Simon & Joanne Cotton v HMRC [2020] TC07553, the First Tier Tribunal (FTT) allowed a VAT DIY Builder's Scheme refund. HMRC had refused the claim on the grounds that there was a change of use and it was out of time.

Simon and Joanne Cotton intended to self-build a property in Scotland as a holiday home or to permanently relocate from their home in Sheffield on completion of the works. Due to unforeseen personal circumstances, including the deteriorating health and death of a close relative, as well as their daughter’s school situation, they decided to stay in Sheffield.

They let out the property as self-catered holiday accommodation in early 2017 when the property was structurally complete. The local council was notified of their ‘change of use’ to self-catering accommodation.

  • The property was let out on at least 20 occasions from 22 July 2017 to 7 April 2018 despite it being an offence to occupy or use a new or converted building until a Notice of Acceptance is obtained in Scotland.
  • The architect submitted a Completion Certificate to Scottish Borders Building Standards on 16 January 2018.
  • A Notification of Acceptance of a Completion Certificate was issued by the council on 10 April 2018 due to additional adaptation works required.
  • A DIY claim of £25,683.15 was submitted on 4 May 2018.

HMRC refused the DIY claim on the basis that it was out of time and the appellants had changed their non-business intentions to business use part-way through the project.

The Cottons appealed HMRC’s decision stating that it remained their future intention to use the property as their main residence. They had previously reclaimed DIY VAT in respect of other self-build properties and on those occasions HMRC had told them that it was not possible to reclaim the DIY VAT until a Certificate of Completion had been issued by the local authority.

The FTT found that on balance, although the appellants had still not taken up residence in the property:

  • It was their original intention to use it as a holiday home and this intention continued to the point of its completion.
  • Until a Notification of Acceptance was issued, the property could not be occupied under Scottish Law, even though the property was illegally habited from early 2017.
  • As the Notification of Acceptance was not issued until 10 April 2018, the appellants had complied with the three-month time rule.

The appellants’ VAT refund request was valid and the appeal was allowed.


The DIY House Builders VAT scheme is available on ‘building materials’ purchased in the course of constructing a new dwelling used for non-business purposes. Builders’ services in connection with the construction of a new dwelling are generally zero-rated. The key condition is that the DIY claim must be submitted within three months of the building being ‘completed’.


Land and property: DIY house-builders scheme (subscribers)
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.

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Simon & Joanne Cotton v HMRC [2020] TC07553