In Brian Lawton v HMRC [2024] TC09309, the First Tier Tribunal (FTT) found that a taxpayer could not make two DIY housebuilder VAT repayment claims where a barn conversion was undertaken in two parts.
Brian Lawton (BL) undertook the conversion of a barn into a dwelling.
- After the issue of a completion certificate dated March 2021, BL made a VAT refund claim in June 2021 under the DIY Housebuilders Scheme.
- This was approved by HMRC and paid in December 2021.
- The planning permission under which the barn conversion was completed included a small single-storey extension, but this was not built at the time of the conversion.
- In January 2022, BL obtained planning permission for a larger single-storey extension to the Dwelling.
- A completion certificate was issued in October 2022, and BL submitted a further VAT repayment claim under the DIY Housebuilders Scheme in the same month.
- HMRC refused the claim. BL Appealed to the First Tier Tribunal (FTT).
BL stated that the project had been severely disrupted by COVID-19. There were financial and economic uncertainties and significant supply chain issues.
In this light, BL decided to obtain a Building Regulations sign-off and a completion certificate for the part of the project that had been finished, excluding the extension, in 2021. BL submitted that this would have allowed the possibility of selling the development, should that have become necessary, due to COVID-19 uncertainties.
The FTT found that:
- Following VAT Brief 8 (2022), HMRC was entitled to insist that only one claim could be made under the DIY Housebuilders Scheme where there had been no:
- Repayment in error.
- Omission in error of invoices and works carried out before the claim was submitted.
- Invoices issued late by a contractor.
- HMRC did not have an obligation to review the planning permission to ensure that all aspects of it had been completed, in the face of the taxpayer submitting a completion certificate confirming that the development was completed.
- BL’s first claim was the only claim that could be made and it was restricted to the stage of development that BL had submitted, as covered by the completion certificate.
- The second claim related to an extension to an existing dwelling. This was not eligible under the DIY Housebuilders Scheme and HMRC’s decision to refuse this claim was correct.
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.
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?
Land & Property VAT (Subscriber guide)
An outline of the VAT treatment of some of the more common supplies of land and property.
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