In Andrew Ellis and Jane Bromley v HMRC [2021] TC08277, the First Tier Tribunal (FTT) found that more than one VAT repayment claim could be made by DIY housebuilders during construction, despite HMRC’s policy to the contrary.

The DIY housebuilders' scheme allows VAT to be recovered on building materials purchased for a self-build project. This puts DIY housebuilders in a similar position to those who buy a zero-rated house built by a property developer.

  • Mr Ellis and Ms Bromley (the appellants) purchased a bungalow in 2002 which they subsequently demolished following planning permission being granted.
  • Construction of a replacement Dwelling commenced. This was ongoing for some time and was not completed at the time of the hearing.
  • In April 2017, the appellants made an interim VAT repayment claim under the DIY housebuilders' scheme. This was duly paid by HMRC.
    • No claim was made at this time for the construction of the garden walls, access to the property or kitchen and bathrooms.
  • A second claim under the scheme was made in May 2019 which covered items not in the 2017 claim. This was rejected by HMRC on the grounds that only one claim may be made.
  • Mr Ellis and Ms Bromley Appealed to the FTT.

The notes to the claim form (VAT431NB) state HMRC’s policy, “You can only make one claim and your claim must be made within three months of the building having been completed”.

  • While the claim form itself contains a declaration that the claimant has read the notes, those notes are not legally binding.
  • Mr Ellis submitted that he found the form self-explanatory and had no need to cross-refer to the notes.

The FTT allowed the appeal. It found that:

  • Section 35 VATA 1994 did not prevent more than one claim from being made.
    • Although the word ‘claim’ was drafted in the singular, the Interpretation Act 1978 indicates this must include ‘claims’ as there was no provision to the contrary.
  • Regulation 201 of the VAT Regulations 1995 is ultra vires where it requires evidence of completion of the dwelling before a claim is accepted, as this limits a self-builder to a single claim.

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 construction, conversion, sale, and letting of a dwelling?

Land & Property VAT at a glance
A summary of VAT on common land and property transactions. 

External link

Andrew Ellis and Jane Bromley v HMRC [2021] TC08277


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