VAT on non- residential conversion to residential

[pstunt]

Hi,

Please can someone put me right on some key points. I have tried to follow other posts in this great forum but I have been left even more uncertain. I have tried for some days to get through to HMRC to obtain guidance but cannot get through. 

 

The situation is this:

 

I have planning for what will be my own and only house to convert a derelict old stable into a residential property. Although, the building is derelict I have to retain some of the walls.

 

The part that is confusing me the most is whether my situation means I will be 0% rated VAT or 5% VAT ( ie reduced rate )  or 5% which I can claim back ?

 

It is this statement on the HMRC website that confuses me

 

 

Conversions

The building being converted must usually be a non-residential building. Residential buildings qualify if they haven’t been lived in for at least 10 years.

You may claim a refund for builders’ work on a conversion of non-residential building into a home.

For other conversions builders can charge a reduced VAT rate.

 

My current belief is that I will not be 0% as it's not a new structure. Therefore I will be subject to the 5% reduced rate but given the above statement am I right in thinking I can claim the 5% back at the end of the build ?

 

Any guidance would be greatly appreciated 

 

Thanks

 

[Jilly]

I'm going through this too. 

 

My builder and the window people have been  happy to charge me 5% VAT and someone on the forum said they thought I would get the 5% back at the end, but reading the info, I'm not so sure. 

 

On Grand Designs (well known source of info!) I'm pretty sure the barn conversion self builder collected allowable invoices where they paid 20% and received 15% back.

 

Suppliers obviously add 20%, so I'm keeping a mix. 

[Big Jimbo]

I had to pay the 5% on a conversion from commercial to residential.

[newhome]

You need to pay 5% on labour or supply & fit arrangements. And standard VAT on materials. You can reclaim the VAT paid at the end of the project, both the 5% and 20% assuming your project is eligible. 
 

Have a read of the claim form and notes as it will help you understand a bit more. There is a specific part of the claim form that allows for the 5% to be reclaimed that is not present on the claim form for a new build. 
 

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/828048/VAT431C_form_and_notes__1_.pdf

 

 

[newhome]

7 hours ago, Jilly said:

On Grand Designs (well known source of info!) I'm pretty sure the barn conversion self builder collected allowable invoices where they paid 20% and received 15% back.

That’s not correct. HMRC will refund the VAT paid as long as it’s been charged at the correct rate, they don’t refund partial amounts. 

[IanR]

As @newhome states. This is how mine worked. 

 

The only caveat is that you can only claim back correctly charged VAT. So if a company that is supply and install insists on charging you 20%, you can't claim that back. You have to work with some companies to help them understand the reduced rate (5%) charge.

 

Be aware also that if you contract a trade directly, that is not VAT registered, you will not be able to claim back the VAT on the goods they supply. Better for you to buy the goods directly, and for them to install and only charge you the labour.

Edited May 19, 2021 by IanR

[pstunt]

Thanks to all. The advice is really appreciated.

 

Coincidentally, I have also managed to get through to HMRC and have confirmed the happy news that you guys are right, in that it would be 5% initially for labour and supply and fit and the standard 20% for materials but I can claim it back afterwards. Which is the piece I wasn't aware of but happily am now.

 

They also underlined the importance of correct VAT invoicing, as some of you rightly pointed out.

 

 

[newhome]

4 hours ago, pstunt said:

Coincidentally, I have also managed to get through to HMRC and have confirmed the happy news that you guys are right

After reading this utterly pathetic response from HMRC on their ‘new forum’ where they avoided a direct answer to either question initially and then still didn’t answer the first question asked I’m a bit surprised that you got a proper answer from them 

 

https://community.hmrc.gov.uk/forums/customerforums/vat/c2f76077-8b60-eb11-8fed-00155d975df7#00a94b09-6f65-eb11-a812-002248417250

 

 

 

 

[pstunt]

Wow! That is a poor response.

In fairness, when I eventually got to speak to someone they were very helpful and answered all my questions.

 

I had also submitted my questions via a web based submission service but this was before I has spoken to them. It will be interesting to see what they come back with and nice for me to have something in writing.

[newhome]

I don’t think there is any ambiguity in what you asked but yes it’s always better to have something in writing.