Can I reclaim/save any VAT?

[richo106]

Hi All

 

We are planning to start our large renovation/re-model project in a couple of months

 

We bought any 1960s bungalow that was empty for 10 + years before we moved into it (after a small refurbishment), we lived in it for less than a year and have now moved out so he can be all ripped out ready for the project to start.

 

We will be turning the bungalow into a house and adding double storey extension

 

I have read somewhere that reduced VAT can apply if empty for over 2 years but i am guessing i screwed that up when we moved in last year

 

I will be project managing myself and won't be using a main contractor but will be arranging the work myself through contractors 

 

I just wondered is there any way I can reclaim/save on any VAT of any kind

 

I will be making it as eco-friendly  as i can with high levels of insulation, ASHP, UFH etc etc

 

I know VAT is reduced rate for insulation now so how come i benefit from that? Would I have to set up a company to supply this?

 

Basically i have resigned to the fact I probably won't be able to save/reclaim any VAT at all so any advice/information will be very much appreciated

 

Happy for people to recommend people to contact/pay for advice on this

 

Many Thanks

 

 

[Temp]

1 hour ago, richo106 said:

We bought any 1960s bungalow that was empty for 10 + years before we moved into it (after a small refurbishment), we lived in it for less than a year and have now moved out so he can be all ripped out ready for the project to start.

 

We will be turning the bungalow into a house and adding double storey extension

 

I have read somewhere that reduced VAT can apply if empty for over 2 years but i am guessing i screwed that up when we moved in last year

 

Possibly. There are two schemes:

 

Empty for 2 years - Vat 5%. I believe you need to use a VAT registered builder to do the work. He will reclaim the excess VAT on materials he buys. I don't think there is a reclaim scheme for DIY'ers.

 

Empty for 10 years - Vat 0%. You can DIY the work or hire a builder. You can reclaim the VAT paid on materials using the same forms for self builders. I believe labour should be zero rated to you as it is for self builders (so nothing to reclaim on that element).

 

In both cases the property must (normally) have been empty for the 2/10 years prior to starting work. However I believe (check) you can move in a few days after starting work and for the duration of the work.  So did you move in on completion day or did you own it and start work on it for a short period before actually moving in? What paperwork can you find to support that?

 

A lot of the rules are in VAT 708 although its written as guidance for a builder rather than an owner..

https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708

 

Quote

 

6.3.3 Proof that the building has been empty for 10 years

You may be required to show that that the building has not been lived in during the 10 years immediately before you start your work. Proof of such can be obtained from Electoral Roll and Council Tax records, utilities companies, Empty Property Officers in local authorities, or any other source that can be considered reliable.

If you hold a letter from an Empty Property Officer certifying that the property has not been lived in for 10 years, you do not need any other evidence. If an Empty Property Officer is unsure about when a property was last lived in he should write with their best estimate. We may then call for other supporting evidence.

 

 

However there is an exception to the "must be empty rule", at least for the 2 year scheme.  VAT Notice 708 has this second rule which might help others qualify if not you..

 

Quote

 

Second rule

You can reduce rate your services of the refurbishment or alterations to a ‘single household dwelling’ where all the following conditions are met:

* The 2 years immediately before the occupier acquired the dwelling it had not been lived in.

* No renovation or alteration had been carried out in the 2 years before the occupier acquired the dwelling (you can ignore minor works that were necessary to keep the dwelling dry and secure).

* Your services are supplied to the occupier - so if you are a subcontractor you must standard rate your work.

* Your services take place within 1 year of the occupier acquiring the dwelling.

 

 

Edited June 1, 2022 by Temp

[richo106]

In both cases the property must (normally) have been empty for the 2/10 years prior to starting work. However I believe (check) you can move in a few days after starting work and for the duration of the work.  So did you move in on completion day or did you own it and start work on it for a short period before actually moving in? What paperwork can you find to support that?

 

We didn't move in on completion day, we moved in a few months later after making it livable (just about) The only paperwork I would have is a water bill as this wasn't payable while empty. Council tax has to be paid in full whether its lived in or not

 

I could contact previous owners (on good terms) for proof of being empty

 

When you said check the rule regarding moving in, who would I contact to find this out?

 

Thanks again for your reply 

[joth]

3 hours ago, Temp said:

* Your services take place within 1 year of the occupier acquiring the dwelling.

 

 

Wow. I think this "second rule" is new? Don't think it existed when we started our renovation in 2020. We had to pay full rate VAT as we moved in on completion. We lived there for 15 months before starting the reno. We only later learnt from neighbours the property had been empty for several years before we bought it (the estate agent said it was one year - that was just the probate period, it turned out).

With the second rule, if we'd squeezed the timeline down to 12months, we could have saved several tens of k in VAT.

Of course, the planning application and making a highly energy efficient (PH certified) design was over half of that 15month period. Love how they make these arbitrary limits to encourage half baked and rushed projects.

 

[richo106]

On 01/06/2022 at 14:43, Temp said:

Empty for 10 years - Vat 0%. You can DIY the work or hire a builder. You can reclaim the paid on materials using the same forms for self builders. I believe labour should be zero rated to you as it is for self builders (so nothing to reclaim on that element)

If I can’t use the 10 year rule I could potentially look into flatting it to ground level and rebuilding it off the existing footings and then I can claim this as a new build? Only problem would the cost of demolition and rebuilding the bit I demolished offset the vat I save.

the property was empty from December 2009, I bought the property June 2021 and moved in December 2021 for 6 months then moved back out 

 

[Temp]

1 hour ago, richo106 said:

If I can’t use the 10 year rule I could potentially look into flatting it to ground level and rebuilding it off the existing footings and then I can claim this as a new build? Only problem would the cost of demolition and rebuilding the bit I demolished offset the vat I save.

the property was empty from December 2009, I bought the property June 2021 and moved in December 2021 for 6 months then moved back out 

 

 

Yes, a knock down and rebuild is zero rated. Might allow the ground floor to be better insulated. Could also be bigger if planning permission obtained.

 

VAT 708...

https://www.gov.uk/guidance/buildings-and-construction-vat-notice-708

 

Quote

 

A qualifying building is constructed when..

 

it’s built from scratch, and, before construction starts, any pre-existing building is demolished completely to ground level (cellars, basements and the ‘slab’ at ground level may be retained) - see paragraph 3.2.3

the new building makes use of no more than a single facade (or a double facade on a corner site) of a pre-existing building, the pre-existing building is demolished completely (other than the retained facade) before work on the new building is started and the facade is retained as a condition or requirement of statutory planning consent or similar permission - see paragraph 3.2.3