Converting a garage.

[Nige]

Hi

 

I’m converting my garage into a bungalow. It’s detached from my house & is about 10 m away. I will be extending it by 50% in size.

 

Having trawled through here & the HMRC website I can’t work out whether I can reclaim the VAT. I’ve owned my house for 4 years and have never used it to store a car. The lady before me owned the property for 50 years, in her 80s & didn’t own a car.

 

Any clues on if I can prove it hasn’t been used to store a car for 10 years whether I’d get the VAT back, & If so, any ideas how I can prove it?
 

Many thanks.

 

Nige.

 

[PeterW]

No - not unless you’re converting it to a new self contained dwelling (ie with its own address etc) and have written proof and even then they can be funny about it. 

[Temp]

+1

If it will be a separate dwelling does your planning permission allow it to be sold off or separately?..

 

https://www.gov.uk/vat-builders/new-homes

 

"For work to be zero-rated for VAT, it must qualify as a genuinely new, self-contained house or flat. This means:

• it’s self-contained - there are not any internal doors or connections to other houses or flats
• it can be used independently of any other property, including businesses
• it can be sold on its own
• it has proper planning permission
• any existing buildings on the site have been demolished completely to ground level (unless you’re extending an existing building to create a new house or flat)

Example

A ‘granny flat’ or annexe you’re building as an addition to an existing house cannot be used or sold separately to the main house. This means you must charge VAT at the standard rate of 20%."

[Nige]

On 24/12/2019 at 08:10, PeterW said:

No - not unless you’re converting it to a new self contained dwelling (ie with its own address etc) and have written proof and even then they can be funny about it. 

Thank you for replying. It will be.

On 25/12/2019 at 12:48, Temp said:

+1

If it will be a separate dwelling does your planning permission allow it to be sold off or separately?..

 

https://www.gov.uk/vat-builders/new-homes

 

"For work to be zero-rated for VAT, it must qualify as a genuinely new, self-contained house or flat. This means:

• it’s self-contained - there are not any internal doors or connections to other houses or flats
• it can be used independently of any other property, including businesses
• it can be sold on its own
• it has proper planning permission
• any existing buildings on the site have been demolished completely to ground level (unless you’re extending an existing building to create a new house or flat)

Example

A ‘granny flat’ or annexe you’re building as an addition to an existing house cannot be used or sold separately to the main house. This means you must charge VAT at the standard rate of 20%."

Thanks. It will be a complete new dwelling. Own address, deeds etc. It’s not a complete knock down & rebuild as that’s uneconomical. I’ll have a good read of the link.

[Temp]

There is more you need to check out...

 

https://www.gov.uk/hmrc-internal-manuals/vat-construction/vconst24200#IDA5F1GH

 

Garage conversions

The term ‘garage’ not only covers buildings designed to store motor vehicles but also buildings such as barns, to the extent that they are used as garages.

A garage that is occupied together with a dwelling is not ‘non-residential’.  Its conversion to a qualifying building will not be eligible for the Refund Scheme. However, if it can be demonstrated that the garage hasn’t been used to store motor vehicles within the 10 years preceding conversion or that it isn’t currently occupied together with a dwelling, then the garage is ‘non-residential’. Its conversion to a qualifying building will be eligible for the Refund Scheme.

Regardless of whether a building (or part of a building) has been used as a garage, once it no longer is occupied together with a garage (ie because it has been sold separately) it will always be treated as a non-residential building.

Please note that if only part of a building is used as a garage, the conversion of the building into a qualifying building won’t be eligible for the Refund Scheme unless Ivor Jacobs can be followed.

 

 

 

[Temp]

As for proof you may need a letter from the previous owner.

[Nige]

Thanks for your help - it’s appreciated.

 

Unfortunately the old girl passed away a year before I bought the place. 
 

I think I’m going to be in to a phone call with HMRC by the looks of it.

[ProDave]

If it turns out a garage conversion is not eligible for a VAT reclaim, could you instead knock down the garage, and build a new build house that may just happen to sit on the same big of ground and may happen to be of similar size to the old garage?

[PeterW]

52 minutes ago, Nige said:

Thanks for your help - it’s appreciated.

 

Unfortunately the old girl passed away a year before I bought the place. 
 

I think I’m going to be in to a phone call with HMRC by the looks of it.

They are a law unto themselves so don’t expect a decent answer ... also worth working out the actual variation as I’ve done one where using non-VAT registered trades the VAT reclaim would be less than £10k for materials but the knock down and rebuild cost would be more than that.