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VAT Claim Rejection – Please help


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Good afternoon, 

 

I’ve just received a letter from HMRC rejecting my claim (VAT431C form). In summary: 

 

  • I appointed a builder to manage the entire project on a supply and build contract 

  • They invoiced me monthly for the work they had completed 

I have attached the letter from HMRC and an example of one of the invoices. I have contacted the builder however they are unable to supply any further information in relation to material and labour quantities.  

 

Additionally, it seems the asbestos should have been charged at 5% VAT, is this correct as the asbestos company stated that they can only invoice at 20% VAT. 

 

Do I have grounds to appeal to HMRC, if so, I would appreciate any ideas on how to respond. 

 

Thanks 

70497368_ReasonCodes.jpg

Invoice Breakdown.jpg

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They are correct.

 

the VAT refund scheme is only for where YOU have purchased materials and paid VAT for those materials which are incorporated into your build.

 

If a builder supplies and fits materials in a new build THEY should zero rate their invoice for both materials and labour.  If they have incorrectly charged you VAT, you must go back to them to reclaim the incorrectly charged VAT

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Hi,

 

Thanks for your response. 

 

I should have added that this is a barn conversion therefore my understanding is that 5% VAT is the correct rate.  However, that's not the reason for the rejection.  HMRC seem to want more information than the builder can provide and don't understand how a monthly payment on completion project works - I would be interested if anyone has had the issue before.

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13 minutes ago, shamrock said:

 

Hi,

 

Thanks for your response. 

 

I should have added that this is a barn conversion therefore my understanding is that 5% VAT is the correct rate.  However, that's not the reason for the rejection.  HMRC seem to want more information than the builder can provide and don't understand how a monthly payment on completion project works - I would be interested if anyone has had the issue before.

I think what should have happened is that the builder should have charged you 5% meaning no reclaim from HMRC was due. What VAT did the builder charge?

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I think I replied to you elsewhere but send them an information pack including the contract, details of how it was to be invoiced (monthly), an explanation that all work in progress would be shown on each monthly invoice so work in progress could show for several months until completed, that it was a fixed price supply and fit arrangement so you were not quoted for materials separately, and send photos of the work. They can’t understand the scope of the work and the contract detail simply from the invoices supplied. It’s not unusual for them to request further details for things that aren’t completely clear. 

 

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On 18/03/2022 at 15:02, SBMS said:

I think what should have happened is that the builder should have charged you 5% meaning no reclaim from HMRC was due. What VAT did the builder charge?


The builder has charged 5% but for eligible conversions this 5% can be reclaimed from HMRC as part of the DIY house builders scheme. 
 

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  • 3 weeks later...

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