Reclaiming VAT on self build

[JanetE]

I was wondering if anyone has any experience of exactly what paperwork is needed for Reclaiming VAT.

Do I need to supply an actual invoice or is an order confirmation itemising the goods,vat etc., with the VAT number on it sufficient to make a reclaim??

I don't want to assume that an order confirmation is adequate and then have the tax man reject it.

[ToughButterCup]

@JanetE, I have a file of notes taken from EB and BH, so I copy the relevant stuff here (from @JSHarris I think...)

 

 

First the basics.  There are separate HMRC forms for receipts where the VAT is broken out as a separate figure and where VAT is just included in the total price.  HMRC will accept spreadsheets that look like these forms, and have told me that they are happy if there is an extra serial number column at the left.  I'll post copies of the blank spreadsheet versions we used later, once I've cleared all the data out.
HMRC need the receipts to be ordered in the same sequence as they are entered on the form, which is where the additional column is useful, as you can pencil a serial number on the top right of each receipt to more easily keep them in sequence.
I found that we had loads of till receipts, rather than A4 printed receipts, and there are two main issues with these.  The first is that they are heat and light sensitive, so keep them somewhere cool and dark or else they will fade.  The second is that they are a pain to try and keep in order, so staple each one to the centre of a sheet of blank A4 paper.  This then allows the serial number to be pencilled in the top right corner, makes them a LOT easier to handle and allows you somewhere to write notes regarding ineligible items and then write the calculated VAT or total price figure down.
The latter is important.  You need to go through every single receipt and check that there are no tools or other ineligible reclaim items on it, and if there are you need to mark them, recalculate either the VAT (for a receipt where VAT is given separately, or recalculate the total price (for a receipt where VAT is only included in the total price).
The receipts need to be in date order and must contain evidence that you are the purchaser (so your name has to be on it, and for a till receipt this may well just be the name on the card used - so take care to use a card with your name on it).  The receipts also have to have the sellers name and their VAT number.  You cannot reclaim VAT from a non-VAT registered seller, or if the receipt doesn't have the VAT number on it.  This latter point is a pain, as I've found several online sellers who fail to put their VAT number on the emailed receipt.  In each case I've had to contact them for evidence of their VAT number, but things would have been a lot simpler had every original emailed receipt had the VAT number on it to start with.
If I were doing this again, then I'd start by keeping better control of the receipts from the moment I received them.  In the case of emailed or web page receipts, printed off, then I'd have checked straight away if they had all the correct information on (my name, suppliers name, VAT number, date, etc) and asked the suppliers to correct any that weren't in order.  I'd also have started stapling till receipts to sheets of paper to better be able to file them and keep them from getting faded, torn etc.  On some of these I'd have made pencilled notes on the attached paper that better described the items.  B&Q, in particular, use a very abbreviated description on their receipts which makes it challenging to work out what the items are.
Finally, I bought a lot of stuff via Ebay, at a good price, but virtually none of it has an eligible receipt.  Many of the sellers are probably not VAT registered, but even those that are very rarely give a receipt with their proper company name and VAT number on, so unless you are saving more than 20% by buying on Ebay items may well not be the bargain they seem.

[Jeremy Harris]

The spreadsheet I knocked up to emulate the parts of the claim form where you have to fill in every receipt, add up the VAT etc, is here, if you want to copy it: http://www.mayfly.eu/wp-content/uploads/2017/01/VAT Claim Form 431 - Blank.xls

 

It comes without any warranty, etc, but I used it and HMRC accepted it.  There's an extra column added at the left to use a serial number - I found it easier to find receipts in the stack and organise them if I pencilled a number at the top right of each one.  HMRC don't mind this at all.

[readiescards]

14 hours ago, recoveringacademic said:

must contain evidence that you are the purchaser (so your name has to be on it, and for a till receipt this may well just be the name on the card used - so take care to use a card with your name on it).

[readiescards]

(got in a pickle with the webpage hence two postings).

 

'evidence you are the purchaser'  what if my partner (non-married, not on the property deeds) purchases items for the new building.  Will the VAT people accept her name on the receipt?

[Jeremy Harris]

We had lots of till receipts that didn't have any name on, one or two that had both our names on and the rest all had my name on.  None of them were rejected, and I am pretty sure they went through them thoroughly, as they came back with detailed queries, withheld a big chunk over an error on a single receipt and all told it was over three months between submitting the claim and getting all the VAT back.

 

I suggest you try and put the claim in both names, that way if a receipt has either name on then you should be OK.

[JanetE]

Thanks for the info which is really helpful.  But back to the original question; is an 'order confirmation' acceptable if it has a VAT number and my name and address on it?  I have emailed a couple of suppliers asking for an invoice and only got back another confirmation of order!!

[Jeremy Harris]

A fair few of our "receipts" weren't marked as receipts, but did have confirmation of payment info and the VAT number.  One or two didn't have the VAT number and I went to the company website and printed off their terms and conditions which always had it on, and just stapled the Ts & Cs to the receipt.  When I did this I pencilled a note on the receipt giving the VAT number and highlighting that it was on the Ts & Cs attached, rather than on the receipt itself.  This didn't seem to cause a problem with HMRC.  I even had to provide a Danish to English translation sheet with one receipt, as you couldn't make out what was the VAT on it.

 

I had the same problem with a fair few companies not sending proper VAT receipts, almost all were online suppliers.  I gave up asking after a while, as I got the same response as you've had, and HMRC seemed to accept it OK.

[Temp]

I can't add much. I think till receipts are ok up to £30? Places like Homebase will give you a hand written VAT receipt with your name and address on it if you ask for one.

 

If it has your lunch on it as well as materials you can just cross off your lunch and put the correct amount on your spreadsheet.

 

The reclaim form asks for  "All the original VAT Invoices, bills and credit notes". I think the word "bill" would cover an order confirmation? Note it also states they "..may ask you to prove that you paid for them". That that implies you don't have to prove it unless they ask.

 

The above is on page 11..

 

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/487894/VAT431NB_form_and_notes.pdf

 

 

 

 

 

 

[Barney12]

Is it just me or does this system still seem to be something of a blunt instrument open to abuse?

How would they actually know if a 'reel of cable and a few lights' (or a number of other incidental purchases) were  actually used on your build? 

[Jeremy Harris]

10 minutes ago, Barney12 said:

Is it just me or does this system still seem to be something of a blunt instrument open to abuse?

How would they actually know if a 'reel of cable and a few lights' (or a number of other incidental purchases) were  actually used on your build? 

 

 

It is open to abuse, to a limited extent.

 

Say, as a hypothetical case, you are self-building a new house, but still own an old house that needs work doing on it before you sell it.  You could, if you were dishonest, buy the materials to do up your old house and add them to the VAT reclaim for the new build. 

 

The problem is that if anyone does this and gets caught then the penalty can be pretty severe.  From the tone of the correspondence I had with HMRC, which was full of warnings about being prosecuted for various offences, and from the very thorough way they went through all the receipts, I don't think anyone could get away with much without getting caught.  They seem to do all the obvious things, like compare the number of sinks, washbasins, WCs etc with those on the plans, and I got the distinct feeling that they wouldn't hesitate to investigate, with a view to prosecution, if they found something that looked awry.

[TerryE]

50 minutes ago, JSHarris said:

.They seem to do all the obvious things, like compare the number of sinks, washbasins, WCs etc with those on the plans, and I got the distinct feeling that they wouldn't hesitate to investigate, with a view to prosecution, if they found something that looked awry.

 

There is something that sounds a bit daft here - not with what you say, but with the policy if true. Most of our subcontract work was zero rated. All of our labour isn't charged. Quite a lot is not reclaimable, so our claim really relates to the stuff we've bought. I doubt whether we could credibly lose or slip in an extra £1,000 it we tried, and if what you say is true, then the HMRC are going to spend a lot of effort to make sure that we don't do this.  Crazy from a general tax payers viewpoint. I am sure that there are better low hanging fruit to go after.

[Jeremy Harris]

8 minutes ago, TerryE said:

 

There is something that sounds a bit daft here - not with what you say, but with the policy if true. Most of our subcontract work was zero rated. All of our labour isn't charged. Quite a lot is not reclaimable, so our claim really relates to the stuff we've bought. I doubt whether we could credibly lose or slip in an extra £1,000 it we tried, and if what you say is true, then the HMRC are going to spend a lot of effort to make sure that we don't do this.  Crazy from a general tax payers viewpoint. I am sure that there are better low hanging fruit to go after.

 

 

I agree, and know from how long it took me to collate all our receipts and fill in and check their paperwork, plus answer their questions afterwards, that they probably spent several man-hours of work on just processing our claim, which was for around £10k.  I doubt all their checking was at all cost-effective to the tax-payer; logically it would have made more sense to just pay the claim without checking it.  I doubt they ever recover the cost of all this checking from withholding incorrectly reclaimed VAT, TBH.

[TerryE]

The trouble is that in these "performance measured" times, the inspectors come under pressure to show that they are making a net contribution, that is the sum total of withheld amounts is greater than some gearing on the cost of the office. And this then results in petty reasons for excluding items.

[Bitpipe]

Yet to get round to this, could use the money but may still have a few big ticket landscaping items that we need to buy first.

 

Some items that I'm wondering about...

 

We bought quite a bit of MDF for built in wardrobes - these are called out in the drawings so hopefully should be OK (I know there are strict interpretations on what is allowed).

 

Also got some temporary plastic guttering while we waited for the alu goods specd in the plans, guessing this is not allowable.

[PeterW]

I had friends who had the HMRC claim rejected for quite a large amount of "commercial" grade internal walling products as they were not deemed to be suitable for use in a domestic build. The plans showed "stud walling" however they used a composite steel/foam panel system due to Chris having access to the skills to use it through his business. Luckily they taken a lot of photos of their build throughout, and used these to prove the product had been used in the build but it took a lot of letters and reports - HMRC refused point blank to attend site to actually see the product in situ.

 

I know by the end (it took 6 months) HMRC reluctantly paid the VAT reclaim - minus about £6 for a receipt with an illegible VAT number !!

[Gdodson]

On 17/02/2017 at 15:53, Jeremy Harris said:

The spreadsheet I knocked up to emulate the parts of the claim form where you have to fill in every receipt, add up the VAT etc, is here, if you want to copy it: http://www.mayfly.eu/wp-content/uploads/2017/01/VAT Claim Form 431 - Blank.xls

 

It comes without any warranty, etc, but I used it and HMRC accepted it.  There's an extra column added at the left to use a serial number - I found it easier to find receipts in the stack and organise them if I pencilled a number at the top right of each one.  HMRC don't mind this at all.

Thanks for adding this!

 

Quick question if I’m using the serial number column on the spreadsheet is the ‘reference/invoice number’ column not required? If it is what information should I populate in it?

 

thanks

[newhome]

19 minutes ago, Gdodson said:

 

 

Quick question if I’m using the serial number column on the spreadsheet is the ‘reference/invoice number’ column not required? If it is what information should I populate in it?

 

You just need one reference number. I called the column ‘Reference/ invoice number’ as that’s what the claim form calls it. The reference number can be your own serial number and you don’t need a second column for the invoice number. 

[Gdodson]

51 minutes ago, newhome said:

You just need one reference number. I called the column ‘Reference/ invoice number’ as that’s what the claim form calls it. The reference number can be your own serial number and you don’t need a second column for the invoice number. 

thanks for clarifying. Just a quick one. How detailed do you need to be in the ‘description of invoice item column’? Thanks 

[newhome]

Example of mine. I got 100% of my claim paid. 
 

 

[Foldyard]

I have completed a barn conversion and I am about to submit a vat reclaim 431C.

 

My question relates to the information given in the invoices about the work done.  My main contractor (MC) billed me weekly for labour and monthly for other costs ie materials, subcontractors etc.  I was operating on a daily rate basis, so the MC would list on the invoice the number of workers of a particular skill eg bricklayers, ground workers, joiners etc, together with the daily rate for each worker and the number of days worked in the week.  This is totted up to give me a figure for labour costs for the week.  More often than not, there is not much if any detail on the particular jobs they were working on.  Obviously bricklayers lay bricks but the invoice does not say that that the bricklayer was working on a particular part of the building.  Is this going to cause a problem with reclaiming vat.  It goes without saying that all the work is being done on the construction of my barn conversion, but does HMRC get anal about it and expect this to be spelled out in every invoice.  As another example, the MC had its own scaffolding but would charge me a cost for using it on my build.  Does it matter that the invoice does not say that it is being used in the construction of my barn?  

 

I would appreciate any guidance on this.  

 

Thanks

[newhome]

I think you should be ok. As long as it has your name and address on it and can clearly be seen to relate to building work I think that will be adequate. Assume they are all 5% VAT for labour and supply & fit invoices, and 20% for materials (supply only)? 
 

You can only reclaim the labour cost for scaffolding, not the hire however. 

Scaffolding is not eligible according to this

 

https://www.gov.uk/guidance/goods-and-services-you-can-claim-for-under-the-vat-diy-scheme#S

 

but for a new build the labour can be zero rated according to this (assuming they are consistent with the 5% on conversions) 

 

https://www.gov.uk/hmrc-internal-manuals/vat-construction/vconst02750

 

 

[Temp]

I think "supervisory services" are also standard rated so be careful if the MC lists his own time as "supervisor".

[Foldyard]

Thanks for the responses.

 

I agree that if I were to hire scaffolding on its own, the hire of the scaffolding would not qualify see:

 

3.4.2 Goods on hire

Goods hired on their own are always standard-rated. Examples include the hire of:

·         plant and machinery (although plant hired with an operator can be zero-rated where all the conditions in paragraph 3.1.2 are met)

·         scaffolding, formwork or false work (although the service of erecting or dismantling can be zero-rated where all the conditions in paragraph 3.1.2 are met)

·         security fencing

·         mobile offices

 

But

 

(i)  I am not actually hiring any scaffolding and certainly not on its own; it belongs to my main contractor he is not supplying it to me.

(ii) Even if my main contractor was hiring the scaffolding and using it to provide his buiilding service to me, it would be a cost component of the contractors supply and not something specifically supplied on to me.

 

 

  

 

 

[newhome]

Why do you have a cost for scaffolding listed on an invoice then? Surely the builder wouldn’t need to mention it separately if he owns it anyway?