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- VAT Newsflash... DIY refund scheme
Friday 07 August 2009 -
If you have built new houses, or converted non-residential properties into dwellings for personal use, you may be able to recover VAT on certain building materials, in the case of builders of new houses or certain building materials and services in the case of converters.
Example: A £200,000 conversion (total cost) could equate to a possible VAT refund of £26,000.
If you think you may be entitled to a refund then contact Phil Luty on 0121 384 9587 or email VAT@dains.com.
The following changes take effect from 15th August 2009
VAT: Changes to forms used to claim VAT refunds under DIY refund scheme
This Brief announces changes to the forms and guidance used by individuals who are claiming back VAT that they have incurred as DIY housebuilders and converters on the costs of their building work.
Background
Since the first supply of new houses and newly converted non-residential properties into dwellings are zero-rated for VAT, the VAT DIY refund scheme seeks to ensure that VAT does not get added to the cost of such a development simply because an individual is building their own home.
Therefore, individuals who build new houses, or convert non-residential properties into dwellings, for personal use may recover VAT on certain building materials in the case of builders of new houses or certain building materials and services in the case of converters.
However, many applications are incomplete in terms of the information and evidence that they provide and some applicants have simply misunderstood what is required of them. This has meant that HM Revenue & Customs (HMRC) has to contact a significant number of claimants to obtain missing information, or further evidence, which feeds into delays in claimants receiving their refund while the information and evidence is awaited.
The changes
HMRC have made two key changes in their review of the operation of the scheme which will come into effect on 15 August 2009. Firstly, they have introduced two new claim forms; VAT 431NB for new houses and VAT 431C for conversions. This should ensure that the right information is provided for each type of development.
The questions are slightly different from the current form but these are designed to deal with many of the common issues that currently arise and so should lead to less queries being raised about the information on the forms.
Secondly, HMRC are withdrawing Notice 719 Refunds for ‘do-it-yourself’ builders and converters and replacing it with separate dedicated guidance to support the completion of each of the new claim forms.
HMRC expects that the better information on clearer claim forms, together with the dedicated guidance, will reduce the number of claims requiring further information or evidence and that this will lead to most claimants receiving their refunds quicker than under the current system.
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