Are you renovating, converting or building your own home?

Are you renovating, converting or building your own home?  VAT issues for self-build property owners can be very complicated, particularly if you’ve never had to deal directly with HMRC before.  And if you have any questions about the subject, I want to know!

Of course, we all know that anything to do with property is difficult and time consuming.  It’s bad enough going through the normal buying and selling processes.  But doing a self-build project is a whole other ball game.  Imagine how difficult it is to spend months or years planning and working on your own construction or conversion, only to find that you run out of money to fund the costs.  Over the years, I’ve seen and heard of several situations where people have ended up selling their dream homes because they’ve run out of money or they underestimated their costs right from the start.

How do you budget for VAT?

And one important part of that is dealing with VAT.  It can add up to 20% to your costs.  DIY developers often assume that they can claim VAT and budget for their net expenditure, only to find that their claim is refused because their project didn’t meet the criteria.  Bad enough if you’re doing it as a business venture, but it can be heart-breaking if it’s your family home and your long term plans are turned upside down.

That’s why it’s REALLY IMPORTANT that you get the VAT correct right from the start.  Most of the information that you need about VAT saving on costs is in VAT Notice 708: Buildings and construction http://tinyurl.com/mod94mc.  If you’re building a new home or converting a commercial property to a dwelling, you may be able to claim back any VAT under the DIY refund scheme.  The claim forms (the VAT 431B http://tinyurl.com/gu4zz9m and 431C http://tinyurl.com/pt9ec7h) and accompanying notes are quite comprehensive.

But that’s often just part of the picture.

HMRC’s guidance is very good, but it can’t possibly deal with every possible scenario.  Plus you might just feel a bit overwhelmed about the whole process – I was recently speaking with a very intelligent young lady who has bought a property to renovate.  After receiving a few quotes from both VAT registered and non-registered contractors, she nearly walked away from the whole thing simply.  She simply couldn’t get her head round how the VAT worked in the different quotes and had been totally stressed out for weeks about it.  Thankfully, after a short telephone discussion I was able to explain things, so she’s now accepted one of the quotes and I’m looking forward to seeing the “after” pictures from her renovation.

Any of those frequently asked questions?

As I said at the beginning of this blog, I’d like to hear from you if you have any queries about any aspect of the subject.  I’m in the course of writing  a short book about teh subject, for those of you self-build/DIY developers.  The aim is to explain the subject in every day English (well as far as you can with VAT rules!), but also to discuss some of the more practical issues you’ll encounter.

One of the sections will be a “Frequently asked questions” section where I’ll be discussing some common queries that aren’t answered in HMRC’s guidance.  For example, what exactly IS a vanity unit, how much VAT can claim on electrical gates or security systems, what about costs such as scaffolding, gardening work etc?  Every situation is unique and with all the will in the world, nobody can think of every possible type of goods or services that might be involved.

That’s where I’d like your help.  I’d really appreciate if you can send me marie@vatexchange.co.uk ANY questions you have about self-build projects, whether you’re renovating, converting or building your own home, as soon as possible so that I can include as many as possible in the book.  If you’re really stuck on something in the meantime, I’ll reply to your email and try to point you in the right direction.

Marie

August 2016