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General: One aspect of the self build Vat reclaim I've never been clear on..

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  1.  
    • CommentAuthorcjard
    • CommentTimeFeb 17th 2017 edited
     
    There are a variety of things that HMRC can use to determine your build to be complete, for the purposes of issuing a VAT reclaim, but my concern surrounds the timings of the various things.

    Taking two items as an example: council tax bill and building control completion certificate.

    The council will likely want to start slamming for CT as soon as possible. It is in the self builder's interest to apply for the reclaim as late as possible. Building control can inspect and deem complete on a schedule dictated by the builder ergo the quandary is:

    Near the end of the build, funds are short and decisions are made to prioritise spending. Driveways, landscaping, the double garage, skirting, internal door, the ensuites etc go out the window. Builder wants to cut outgoings elsewhere such as rented accommodation, and live in the habitable incomplete space. Council tax will be due, but it's not wise to apply for (nor may it be possible to obtain without further works) a BC completion certificate.

    So, builder lives in the property for a year, completes it gradually, and with less financial intensity, gets his completion cert and fires in his reclaim a moth later..

    Is it not a problem, the recent dated completion cert is accepted
    or
    is it a case of "DENIED. Although your completion cert is dated one month ago, we can see you started paying council tax on it a year a go, which is one of the other indicators of completion we accept.."

    Though articles have alluded to it as a problem, I've never seen proper comment on whether HMRC take the latest evidence of completion you submit, or go rummaging in government records for the earliest bit of evidence

    Of course, in an ideal world, crash bang, ct, mortgage, bcc all done and dusted switched etc in the same 3 months and the point is moot. In an ideal world
    • CommentAuthortony
    • CommentTimeFeb 17th 2017
     
    You wouldn't need to worry as you would be going to prison anyway for living in the house with no completion certificate.
    • CommentAuthorDarylP
    • CommentTimeFeb 17th 2017
     
    There is nothing stopping you living in a house without a completion cert / BC sign off.
    I know at least 3 'farmers' doing it as I type.
    Your buildings insurance may not be valid, but that is about it....?
    :confused:
  4.  
    Posted By: tonyYou wouldn't need to worry as you would be going to prison anyway for living in the house with no completion certificate.


    Can you show supporting evidence for that statement?
    • CommentAuthorEd Davies
    • CommentTimeFeb 17th 2017
     
    Related: in Scotland you can get a temporary completion certificate (forgotten the proper name) which says the house is habitable but not complete so you can live in it and you then have a year to get the full completion. Presumably you pay council tax if you do live in it.

    My assumption is that HMRC would take the full completion rather than the temporary one as the appropriate date but it'd be nice to be sure.

    People I know ran a B&B in a house for quite a few years (6?) without a completion certificate. In theory it was only a conversion rather than a new build but I think they only actually kept two walls of the original house so pushing the definition of that.
  6.  
    Interesting. Both ourselves and our near neighbours (who were self building at the same time) moved 15 months ago and neither of us have yet got building regulations sign off (and, despite being substantially complete are both likely to be some way off).

    We declared our actual move in date for council tax from moving in (we're using the council services, personally I think theres a moral right to pay and there are various ways in which the council can assess when you moved in anyway and backdate). Both of us have done our VAT reclaims based on the Council tax valuation lettter (you have 6 months from completion to claim).

    I didn't get the impression from any part of the VAT reclaim process that there was any attempt to refuse a claim - I'm pretty sure you'd get away with claiming based on a much later building regulation cert (and if you're worried then call and ask - you don't have to give your real name and address for the enquiry). I just don't think they're going to look up a council tax completion and refuse based on that.

    I found this on a search (it was referenced but the link was to a dead page on an LA site):
    "When a building is occupied before completion the Local Authority should be notified. By law, the Building Control Officer must be told when the work reaches each of the following stages. The officer will then need to inspect your works - Occupation before completion (not more than 5 days before occupation) If you wish to move in to your self build home prior to final completion, a habitation inspection may need to be arranged."

    We didn't do that so I do wonder if our insurance could be invalidated. I'm pretty sure they'd only be able to refuse if they could prove it was a loss caused by something that hadn't been signed off (eg - the final sign off isn't the inspection for most things, it's ticking boxes to say other inspections have been done - we've got an electrical, gas cert etc). We're unlikely to suffer a loss due to the lack of stair handrails...
  7.  
    Of course, the VAT claim is one way of freeing up cash for those other things.

    Buy all the materials you need to do the remaining jobs you'll be doing yourself, put in the claim, delay the work that you're paying other people to do. If it's supply and fit then the work is VAT free and outside the scope of your claim.

    Theoretically work done for you can't be zero rated after you are complete but your suppliers don't know that and will zero rate for you. Theres minimal chance of them being audited and even if they are they'll have your planning permission on file which will be enough for the auditor to stop digging (just wouldn't be worth their while to do a further check for completion certs/VAT claims to make sure the dates matched up)
  8.  
    We moved in late last summer and got our Building Control certificate in late January (so there is over three months between the two dates). I couldn't find any documentation abut this issue and filled out the claim honestly.

    I'm happy to let the forum know how I get on with my claim. It won't be conclusive proof, but would be a precedent.
    • CommentAuthortony
    • CommentTimeFeb 17th 2017
     
    VAT law is based on if you have to pay it you must pay it and it can be reclaimed they must pay it back to you.
    • CommentAuthorringi
    • CommentTimeFeb 17th 2017
     
    Why don’t people setup their own limited company to do their build, so being able to charge themselves at 0% vat? (The contract with the company should say that it just adds a mark up of say 0.5% on what it costs the company.)
  11.  
    <blockquote><cite>Posted By: tony</cite>VAT law is based on if you have to pay it you must pay it and it can be reclaimed they must pay it back to you.</blockquote>

    Not sure what point you're making. Self-build VAT seems to be "a law unto itself". I can't see any logic or consistency to the rules around it.

    There are lots of input costs that would be reclaimable but any business but aren't for a self build (eg professional services, even though they're an essential component of the build process). Supplies reclaimed, but supply and fit can't be claimed (must be zero rated). Arbitrary time limit for the claim to be submitted - for a company the last 4 years are 'in play' so no reason you should have to complete your self build claim within 6 months.
    • CommentAuthorSimon Still
    • CommentTimeFeb 17th 2017 edited
     
    Posted By: ringiWhy don’t people setup their own limited company to do their build, so being able to charge themselves at 0% vat? (The contract with the company should say that it just adds a mark up of say 0.5% on what it costs the company.)


    I wondered this myself and you can't but I can't remember exactly why. I did buy some stuff through my limited company (where suppliers would only deal with a company and not an individual) and recharged them, with VAT to myself as an individual but there was no benefit (other than a timing - I owed my company some money for a while)
    • CommentAuthorringi
    • CommentTimeFeb 17th 2017
     
    Posted By: Simon Stillso no reason you should have to complete your self build claim within 6 months.


    I think that is partly so they can make checks with companies your brought things from if the so wish.
    • CommentAuthorcjard
    • CommentTimeFeb 20th 2017
     
    > Why don’t people setup their own limited company to do their build, so being able to charge themselves at 0% vat? (The contract with the company should say that it just adds a mark up of say 0.5% on what it costs the company.)

    A friend of mine claims to have done exactly this with his company - there was a degree of separate I imagine, in that his non-spouse was the end client

    Though exactly what issue HMRC would take with a construction company headed by Mr Smith, having only one client (Mr Smith) for whom it was constructing a house, I'm not sure
    • CommentAuthorborpin
    • CommentTimeFeb 21st 2017
     
    My situation (in Scotland) is that I moved in just over 3 years ago on a temporary completion certificate, renewed the Building Warrant twice, and have recently got a completion certificate and sent in, and had approved, my VAT reclaim (nothing rejected).

    Valuation Officer said that they just go round monitoring what is going on and if it looks like the house is occupied they will serve a valuation notice so I have been paying CT for about 2 years.

    HMRC seemed quite content with the completion certificate as the completion point.

    In terms of finance, I have/had a number of 0% credit cards running. You could at one time get 36 months for 1.9% transfer fee which is an approximate APR of 0.6% (note I said approximate). Cheapest way to borrow. Some were even cash transfers so I could get the money to pay off other 0% deals!

    Once HMRC actually cough up, I'll leave it in my 123 account gaining interest until the deals run out!

    BTW, Claim submitted in Nov and I still have not actually got my sticky paws on the money. They responded 4 weeks after their estimated date and then they say they pay within 20 Working Days!!!!!!

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