The DIY Housebuilders Scheme
Following a recent win by the taxpayers at the Tax Tribunal, HMRC are having to reconsider their approach to claims under the DIY Housebuilders Scheme and allow multiple claims, subject to meeting the other scheme requirements.
The DIY scheme is intended to put self-builders in the same VAT position as those who buy new properties from developers in that developers are able to claim VAT on the building materials used in the construction and so the DIY Scheme allows self-builders to do the same.
In the case of Andrew Ellis & Jane Bromley v HMRC, Mr Ellis was building their home in his spare time and so the project took several years to complete. They made an initial claim under the DIY Scheme in 2017 which HMRC repaid and then a second claim in 2019 which HMRC refused on the grounds that the notes to the DIY claim form stated that only one claim could be made per project.
Mr Ellis admitted that he had not read the notes as the form was self-explanatory but more importantly the Tribunal found that the notes were not in fact legally binding. Furthermore, they concluded that requiring a property to be completed before submitting a claim was outside of the law as it limited a taxpayer to only one claim and potentially a lengthy cashflow disadvantage over developers who are able to claim VAT as their project progresses.
This is welcome news for DIY housebuilders who should now be able to make interim claims. However, the requirement that the claim is correct when submitted has not been removed and so we would urge caution when submitting a claim to ensure that it is accurate and only eligible items are included. To find out how we can help you with this, please get in touch
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