The HMRC VAT Refund Scheme

The Value Added Tax paid by ‘Self Builders' for the materials used in the construction of a new dwelling, or creation of a new dwelling by conversion is normally reclaimable from HM Revenue & Customs (HMRC) who administer the ‘self build' VAT scheme. The Refund Scheme puts DIY builders and converters in a broadly similar position to a developer selling a zero rated property. Guidance on what can be claimed is set out in HMRC documents VAT431NB for new builds/or VAT431C for conversions.

The claim has to be presented in the format set out by HMRC who issue a claim pack for submission at the end of the project. During 2009 the format of the claim was revised, claims are now submitted using different claim forms for new build and conversion projects.

Supporting evidence has to be scheduled and submitted with the claim.

Some important points:

• Only VAT you pay on goods and materials that are incorporated in the building and its site can be claimed.
• Only one claim is allowed, normally after completion & within a three month period.
• Only the correctly charged rate of VAT can be reclaimed.
• Some services cannot be reclaimed whilst others should be zero rated to you.
• There are restrictions on what can be claimed. Plant, tools, carpets, most appliances and furniture are excluded. Guidance is given in Notice 719.
• You cannot claim back VAT for professional services, e.g. architects, engineers, surveyors and planning fees.
• Knowledge of the current regulations is essential for obtaining the maximum refund.
• Special clauses apply to conversions and work to listed buildings.

HMRC VAT Refund Scheme information:

• New build: VAT431NB
• Conversion: VAT431C