Is the DIY Housebuilders Scheme (VAT431NB) continuing in to 20-21

[djcdan]

Hi all. My very first post here. Currently in planning for a self-build.

 

We are speaking with a timber frame erector right now, who we were just about to confirm for our build. Through their site, they advertise a supply and installation service, therefore zero rating the supply of the frame. However on requesting our job goes through a supply and fit, the erector has come back to say that the rules for VAT on new builds is changing for 20-21 and their accountant has advised that they can no longer offer this service.

 

I can find nothing online that suggests that the DIY Housebuilders Scheme has, or will be stopping imminently, and details on this are still shown on HMRC's website. Having put in a lot of work up to this stage in preparation for the build, I'm pretty sure I would have come across something of this significance, but would like to get clarification from the community here that I am correct.

 

I am not sure why the erector would provide inaccurate information, but this, along with a misunderstanding by the erector about how and when VAT is charged (I have ten years running my own business/handling VAT, so could immediately see inaccuracies in his attempt at an explanation) has got me wondering whether this contractor is right for our project. 

 

Can others here confirm that the DIY Housebuilders Scheme will be continuing for the foreseeable?

 

Thanks. Dan

[newhome]

1 hour ago, djcdan said:

Can others here confirm that the DIY Housebuilders Scheme will be continuing for the foreseeable?

 

 

The DIY Housebuilders Scheme is in place to reclaim VAT paid on materials. There is no reason to suspect that it will not be continuing.

 

A supply and fit arrangement for a timber frame kit comes under VAT Notice 708 which should be used to determine the amount of VAT that should be charged. The notice states: 

 

Quote

his notice may also help if you, as the customer or client of a contractor, subcontractor or developer, wish to satisfy yourself about the correct liability of the supplies of goods and services being made by them to you.

This is especially so in the case of DIY house builders and converters (‘self builders’), who contract VAT-registered builders or tradesmen to carry out construction or conversion services and are charged VAT on those services. Some, if not most, of the VAT charged can be recovered by the self builder through the provisions of the DIY house builders and converters VAT Refund Scheme but only where that VAT that has been correctly charged in the first place.

 

There is no reason to suspect that VAT Notice 708 is changing anytime soon so supply and fit arrangements as you describe should be zero rated. 

 

VAT Notice 708

 

Maybe the company or the company's accountant have got confused with the domestic reverse charge however in any event this only applies to companies or individuals registered for VAT

 

Quote

The reverse charge does not apply to consumers or final customers of building and construction services. 

 

Domestic Reverse Charge

 

 

 

[Temp]

Where is the TF company based? If they are abroad then the rules may well change. My understanding is that for high value items vat would be charged at the port of entry. They would call you up and you would have to pay it over the phone to get delivery then reclaim it at the end.

 

_if_ I'm correct you have to agree the co won't charge local vat (eg Belgian, or French) or you could pay vat twice and only the UK vat could be reclaimed.

[Temp]

If they are based in NI then I've no idea how it's meant to work.

[djcdan]

@newhome Thank you very much. The Domestic Reverse Charge broadly looks like what the erector was trying to explain to me. I believe that they and their accountant has some wires crossed between DIY Housebuilders Scheme and the new DRC.

[djcdan]

@Temp The frame supplier, frame erector and ourselves are all based in Scotland. So there wouldn't be any cross-border VAT implications here. Thanks for the response though.

[Temp]

In that case I agree with others. Not heard of any changes. Ask them for a link to any HMRC documents?

 

If you get this wrong and pay them vat when you shouldnt you can't reclaim that from HMRC. HMRC will refer you back to the company to reclaim vat paid in error.

 

 

Edited April 8, 2020 by Temp

[djcdan]

@Temp Yes, this actually crossed my mind that they advertise a supply and fit service to zero rate the frame, but when they have the customer, they make an excuse that 'rules have changed' etc etc and can no longer offer the service, but in fact they aren't VAT registered in the first place. Of course, it could entirely be a misunderstanding and confusion on their part, but I'll definitely be checking their VAT registration.

[Temp]

If I remember correctly the VAT threshold is about £80-90,000  a year (turnover).  Hard to believe they aren't VAT registered if they are supplying the frame for a few houses a year?

 

 

[Temp]

Ok now I'm back home I've done some googling and found there is a change coming in the construction industry BUT it shouldn't affect self builders...

 

Note the dates changed to Oct 2020.

https://www.rousepartners.co.uk/construction-reverse-charge-vat-accounting/

 

 

Neither appear to apply to sales to self builders who are the "final customer"...

 

But this will not include:

• Direct to consumer sales: It will exclude supplies to the final customer or those not in the construction sector, such as a high street retailer.

 

 

[Temp]

 

See Q3 Is your customer VAT registered

Self builders aren't normally  VAT registered so normal VAT rules apply (presumably the current rules).