In Carl Sansom v HMRC [2020] TC07684, the First Tier Tribunal (FTT) held that HMRC cannot refuse to accept the certificate of completion as primary evidence of the property’s completion and the appeal was allowed.
Mr Sansom had constructed a house in Essex.
- He and his family moved into the property on 4 July 2013 but Building Control refused to issue a certificate of completion until 19 June 2018.
- On 1 September 2018, within the three months of the issue of the certificate of completion, Mr Sansom applied for a VAT refund of £17,641.48 incurred on building the house under a DIY House Builders Scheme.
HMRC refused to refund Mr Sansom’s VAT.
- They said the date of 'completion' was not decided by reference to the certificate of completion, but by applying a multi-factorial test.
- Having applied that test, HMRC decided that the application had been made outside the three-month time limit and refused the claim.
Mr Sansom argued that between October 2016 and June 2018 he had incurred costs on fixing issues identified by Building Control. He also stressed that until the completion certificate was issued and, given the 'one-off' nature of the DIY reclaim scheme, until the completion certificate was issued there was no way for him to know if he still had to incur significant building costs on the property.
Mr Samsom appealed the case to the FTT.
The FTT concluded, in light of the two similar FTT cases, Farquharson v HMRC and Dunbar v HMRC, that HMRC cannot refuse to accept claims within three months of the issuance of the certificate of completion on the basis that the individual has failed to meet some uncertain and imprecise multifactorial test .
The appeal was allowed.
Comment
The DIY claim form must be submitted within a strict three months of completing the project. HMRC takes a tough policy on when a building is ‘complete’ for VAT purposes. They are increasingly challenging claims where the building is occupied more than three months before a DIY claim is submitted, on the basis that the building was ‘complete’ at the time of occupation.
Links
Land & Property: DIY Housebuilders 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.
DIY Builder's VAT claim allowed despite certification delay and change of use
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.
External links
Carl Sansom v HMRC [2020] TC07684