vat office letter detailing current approach to claims

[mvincentd]

Letter received at end of last week.

...the letter ended saying "please allow 20 days from the date of this correspondence for funds to appear in your account"...or words to the effect.

 

[Bozza]

Very fair imho

[Wagas]

  On 24/08/2020 at 19:21, Bozza said:

Very fair imho

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I don't think it's fair. We have to pay VAT instantly on everything we buy, we get fined for filing late tax returns and yet these VAT civil servants take months to do anything. Having to wait months for 30% of the claim isn't fair in my book. I think we are still owed about £10k which would be really handy at the moment. We submitted our claim on 30th March.

 

 

[nod]

We where also told to allow 20 days 

The money appeared 4 days later

Pre Covid 

[newhome]

  On 24/08/2020 at 19:29, Wagas said:

 

I don't think it's fair. We have to pay VAT instantly on everything we buy, we get fined for filing late tax returns and yet these VAT civil servants take months to do anything. Having to wait months for 30% of the claim isn't fair in my book. I think we are still owed about £10k which would be really handy at the moment. We submitted our claim on 30th March.

 

 

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I agree. Everything seems to be in their favour all of the time. It took 20 weeks for them to process my VAT reclaim in 2018, well outside their expected timelines and with no fear of anyone holding them to account. Most companies have been working near normally throughout Covid 19, but not these guys! 

[Temp]

If you think this is bad try registering a Lasting Power of attorney at the moment. Taken me 6 months so far. While you wait you may have to find £1500 a week for nursing home bills ? 

[Bozza]

Hang on a sec.  We’re in the middle of a national emergency / pandemic and the HMRC redeployed their people to administer the priorities of the numerous emergency tax schemes - Furlough, emergency business loans, etc etc etc.   I’m sure they assessed that the Self Build VAT Reclaim Scheme might not be a priority over the small matter of saving the economy, jobs, businesses and ensuring millions of people who couldn’t work could feed their families and pay their mortgages/ rent.  Or are we suggesting that those of us who are privileged enough to have built our own homes and awaiting some money back should have been the priority ?   
 

And so due to there being an inevitable backlog they’ve decided to change their rules to release 70% of claim ASAP, while they clear the backlog and can fully check the claims.  What exactly should they have done?

 

”Dear Mr Smith, please find enclosed your VAT refund.   Because we have prioritised the VAT refunds for self builders over other emergency Covid 19 schemes, I’m sorry to say the economy has now completely crashed and your lovely new home is now worth about the same as your VAT refund.  Yours, HMRC”
 

 

Edited August 24, 2020 by Bozza

[Mr Punter]

I am with @Bozza on this.  Had they decided to scrap the scheme just as you were finishing the build as they needed to make savings I could understand the ire.

 

During this pandemic, lots of people have lost their livelihoods through no fault of their own.  Waiting 20 days for the final part of your VAT refund is not a crime against humanity and democracy.

[Wagas]

  On 24/08/2020 at 21:32, Bozza said:

Hang on a sec.  We’re in the middle of a national emergency / pandemic and the HMRC redeployed their people to administer the priorities of the numerous emergency tax schemes - Furlough, emergency business loans, etc etc etc.   I’m sure they assessed that the Self Build VAT Reclaim Scheme might not be a priority over the small matter of saving the economy, jobs, businesses and ensuring millions of people who couldn’t work could feed their families and pay their mortgages/ rent.  Or are we suggesting that those of us who are privileged enough to have built our own homes and awaiting some money back should have been the priority ?   
 

And so due to there being an inevitable backlog they’ve decided to change their rules to release 70% of claim ASAP, while they clear the backlog and can fully check the claims.  What exactly should they have done?

 

”Dear Mr Smith, please find enclosed your VAT refund.   Because we have prioritised the VAT refunds for self builders over other emergency Covid 19 schemes, I’m sorry to say the economy has now completely crashed and your lovely new home is now worth about the same as your VAT refund.  Yours, HMRC”
 

 

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Some people need the VAT reclaim to pay their bills. We are not in the middle of a pandemic, the government is paying people to go to restaurants and begging people to go back to work. 

 

You asked what they should have done and what they should have done is pay out 100% of the claim now and then claw it back later if there is discrepancy.

 

[Bozza]

I do accept that some literal self builders whom have paid VAT on all their materials throughout their build may well be relying on their VAT refund to perhaps reduce mortgage loans etc pay off credit cards etc etc.    So that’s why they’ve release 70% ASAP in contravention of their own normal rules.  They didn’t have to do that. 
 

The way I see it is the prudent way to organise the finances of a self build is not to reply on a future VAT refund for anything other than a  “cash back” bonus that you can use for luxuries eg new furniture, a deserved holiday, or to perhaps reduce the loan.   I saw a Grand Designs show recently where a bloke was so ambitious with his massive project that he had ran out of money and was relying on his VAT refund to complete the house.   I think a sensible approach is to budget a build on a basis as can you afford to finance a build to completion, including the upfront VAT cost.  The bonus the being you the get 20% back at the end.
 

Yes perhaps we are past the worst of the pandemic disease wise at the moment, but we still in the midst of the economic affects.  The pandemic is not behind us.
 

Yes they could have paid out 100% of the pending claims and claim back overpayments.   But that would have meant them putting additional resources (at taxpayers cost) to do that in addition to the checks they need to do anyway.   Also not a problem if everyone reads the rules & entitlements and put in accurate & legit claims, but it seems that is not the case whether accidentally or not.  They have a duty to all taxpayers, not just to us.
 

I should add that because I’m in Scotland my build stopped because of Covid.  It has cost me financially.  My VAT refund will be later than expected.  I’m lucky in comparison to many.   Including those key workers ( inc HMRC staff) who’ve had to go into their work and thus taken a higher risk to infection than me.

 

 

 

 

 

 

 

 

 

 

 

Edited August 25, 2020 by Bozza

[mvincentd]

I posted the letter imagining it to be useful information for anyone recently embarked on a vat reclaim.

Given that this thread seems to have turned into an opinion piece i'll clarify my own position as the o/p;....I find the vat office approach perfectly reasonable under current circumstances.

However, I don't see debate over the fairness of it as useful to this build related forum, it won't change the facts ....maybe start a moaning thread in the non-build related section to discuss the performance of our various government departments and agencies.

What might be useful is if other current/imminent claimants update this with their own outcomes.

 

Further useful info on my claim.  Claim submitted 1st June, claim acknowledged mid july, that letter received 21st August, plus 20 days would be 10th September, so 101 days end to end.

 

We dont have Building Regs sign off yet, we moved in last August and had a VOA effective from 12/08/20.  We were concerned this may trigger a 3 month time limit on claim submission.  There has apparently been inconsistent application of rules by the VAT office due to slightly ‘blurred‘ definitions of completion, and we didn’t want to fall foul of this.  We spoke with the VAT DIY Helpline 0300 322 7073 for clarification.  They explained the 3 month deadline would not be triggered by the VOA but that reasonable explanation of delay should be provided along with our claim.  They also cautioned against waiting for the Building Regulations completion certificate if only limited external works remained or if VAT expenditure became nominal.  As such they described it as a balancing act.

Submitted invoices within the final 3 months to claim date show that quite fundamental works have been ongoing.  They cover for example plasterboard, dab adhesive, angle beads, plaster, sand, cement, 2nd fix electrical components, plumbing components etc.  We wrote that we believed we had chosen the right moment to submit our claim.  On the one hand we have amongst other things 2 bathrooms still to fit, only a rudimentary kitchen, 3 undecorated rooms, outstanding external render and landscaping works still to do.  On the other hand Covid-19 has ensured completion will remain out of reach for some time.

Against this background we were braced for some malicious wriggling on technicalities by the vat office but actually they seem to have been entirely fair and reasonable in the application of their rules.

[Bozza]

You are quite right your post was a helpful factual update on the current VAT reclaim process and some of us have then debated/agreed/disagreed the HMRC decision.  ?  

 

In terms of your recent claim was there anything allowed/not allowed that you didn’t expect was the case?  Or anything they queried you didn’t expect.  For those of us yet to claim.

 

ta

[Temp]

HMRC can't be that busy. They are chasing me for no reason I can identify. Basically they sent a letter saying they "may have evidence" but as far as I can tell its a fishing exercise and my accountant says many have received same letter.  

Edited August 25, 2020 by Temp

[newhome]

Covid is just an excuse but at least they’ve given one. They gave no reason why it took 20 weeks to process my claim in 2018 when they state that it should be about 6 weeks. 
 

 

[newhome]

  On 25/08/2020 at 10:47, Bozza said:

 

In terms of your recent claim was there anything allowed/not allowed that you didn’t expect was the case?  Or anything they queried you didn’t expect.  For those of us yet to claim.

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It sounds as if they haven’t checked anything. They’ve just paid out 70% and the checking will come later. 
 

TBH they could have someone scanning all of the documents and then putting them into a PDF file or similar so that people could work from home checking the claims. Not enough office space to accommodate everyone seems to be a stretch when a role is desk / paper based and doesn’t require any specialist equipment or contact with customers. 
 

My company issued 2 years worth of laptops to those who didn’t ordinarily work from home within 2 weeks to enable people to remain productive. 
 

 

[Bozza]

Right enough, they haven’t checked it, so mvincentd won’t be able to answer my question yet.  I won’t be defending or debating HMRC further though, out of his respect for his/her request as OP. 
 

 

 

[PeterW]

  On 25/08/2020 at 12:10, newhome said:

Not enough office space to accommodate everyone seems to be a stretch when a role is desk / paper based and doesn’t require any specialist equipment or contact with customers. 

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They have spaced a few of the HMRC offices out to 2m in all directions which has meant they have reduced capacity to 15-20% of available desks. We both probably know too that civil service remote working solutions are archaic and it’s not surprising they can’t work at home. 
 

Last time I checked I’m pretty sure one department still ran Blackberry as their mobile mail solution ... 

[mvincentd]

  On 25/08/2020 at 10:47, Bozza said:

was there anything allowed/not allowed that you didn’t expect was the case?

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  On 25/08/2020 at 12:10, newhome said:

It sounds as if they haven’t checked anything. They’ve just paid out 70% and the checking will come later.

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Yes, that is the entire thrust of the letter.

[laurenco]

  On 24/08/2020 at 18:37, mvincentd said:

Letter received at end of last week.

...the letter ended saying "please allow 20 days from the date of this correspondence for funds to appear in your account"...or words to the effect.

 

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Excellent, thanks for the heads up. I'm about to do my vat reclaim, and to know they process 70% quickly is reassuring

[vfrdave]

I got a different reply.

 

Submitted claim towards end of July and initially got a txt msg response.

 

Nearly a month later got a letter that just states they have received it and will try to deal with it in 6 weeks.

 

No mention of covid and no mention of paying 70% up front.

[mvincentd]

  On 30/08/2020 at 20:01, vfrdave said:

I got a different reply.

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No, it's the same at that stage (except i didnt get a text).  I got the acknowledgement with 6 week prediction after about a month......THEN the letter re 70%, which came a little quicker than the 6 weeks.

[mvincentd]

Update, 70% received in account 19 days after their "please allow 20 days" statement.

[Frogeye]

19 'working' days ?

[mvincentd]

Calendar days.

 

[vfrdave]

  On 30/08/2020 at 20:01, vfrdave said:

I got a different reply.

 

Submitted claim towards end of July and initially got a txt msg response.

 

Nearly a month later got a letter that just states they have received it and will try to deal with it in 6 weeks.

 

No mention of covid and no mention of paying 70% up front.

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Got a letter this week stating my claim is approved and will be paid within 20 working days.

 

Quibble over 2 invoices which I will sort out. No 70% payment, all done within timescales.