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Hi.
Hope you can help with my query. My father has recently hap permission approved for the conversion of a commercial building to be converted into a 4 bed residential home.
My father met all specifications etc. Recently the council have approaced him and stated he will need to reapply for permission as a re-build die to the fact he HAD to replace the two end walls of the property as they fell down upon the removal of the roof.
My question is whether or not my father can still claim back VAT on the building expenses, materials, labour etc, with the development now classed as a re-build?It is still a conversion project which would generally allow this VAT rebate, but |I am unsure the the council recent move to have my father re-apply for a ‘Re-Build’ application will void any such rebate.
If you could aid in shedding any light that would be very much appreciated.
Regards
Colin
Hi Colin
I don’t think that there should be a problem but I can’t give you a definitive reply. I’ve not dealt with the same situation in the past, or even anything similar. As you know, the claim form requires proof that the work has been lawfully carried out and requires you to send the planning permission for the work with the refund claim. As far as I can see, it doesn’t matter how the work is defined by the planning authority as long as the work carried out meets the VAT refund scheme criteria – i.e. that after the work was carried out there is a dwelling which didn’t previously exist.
There is, however, a further aspect that might affect the claim. I’m not sure whether the fact that the planning permission for the “rebuild” was given AFTER the work was started would affect the refund claim. Normally you can only recover VAT on costs where the work is done AFTER the planning permission is granted, so it’s not clear whether HMRC would accept that date of the ORIGINAL planning permission would apply or that of the REVISED planning permission. I’ve had a quick look at teh legislation and the HMRC guidance on the refund scheme and I can’t see anything that explains what should happen in such unusual circumstances.
My gut feeling is that HMRC would grant the full claim because of the unusual circumstances, I just can’t say for sure because I’ve never dealt with such situations in the past. And I appreciate that the VAT refund could affect the finances of the project so you need certainty before proceeding.
What I would suggest is that your father should write to or email the HMRC enquiries section http://tinyurl.com/cxhrj9y with the full facts and ask if the full claim will be granted given that:
1. the work has been designated as a rebuild by the local planning authority; and
2. the revised planning permission has been given AFTER the work commenced, although the original planning permission was given BEFORE the work commenced.You could try calling the VAT helpline but given that your father’s circumstances are quite unusual, its important to get a written response and you can only get that if you put the query in writing.
I know that this doesn’t answer your query directly, but I hope this helps. I’m happy to talk about this in a little more detail (no charge or obligation) if you’d like to send me your contact details using the contact form.
Marie
Hi Colin,
Glad I could help and yes please let me know how you get on with HMRC. I’m always interested in case I come across similar situations in the future. And if you do get stuck, please do drop me an email and we can have a chat about it.
Regards
Marie
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