0% VAT Eligibility - retaining wall

[Adam2]

Hi all, I'm doing a re-build and need to ensure we fit the requirements for 0% VAT. I understand that we can retain foundations/slab - not that we will necessarily do this but if we go with a passive slab maybe we can place on top of existing slab - would reduce demolition costs by 3K but at the moment hard to know if this is desirable or feasible. But that is not the question, the existing house is built going down a hill and has 2 retaining walls at the moment. Ground  (entrance) level is a living area + bedroom, upstairs more bedrooms then LG is living area and another LLG is a gym/study. The LLG and LG have a retaining wall at the step up to the floor above. It may be beneficial to keep these retaining walls as so far we cannot see any damp so they seem to be working OK. Our build is likely to be ICF + passive slab so maybe we just build against these retaining walls or just insulate them (TBC). The question really is whether on a sloping site they would be likely to count as "below ground" so OK to retain or not  (from a 0% VAT perspective) - if anyone has direct experience or a reference source that would be good. Ultimately, when we understand the implications of different options we can probably check with HMRC on this if we do want to consider keeping them.

Thanks

Adam

[Jeremy Harris]

We have a big retaining wall, all above ground, and it was zero rated.  For an idea of the work we did, these blog entries might help:

 

http://www.mayfly.eu/2013/07/part-six-there-we-were-digging-this-hole/

 

http://www.mayfly.eu/2013/07/part-seven-pouring-concrete/

 

http://www.mayfly.eu/2013/07/part-eight-the-wall/

[Declan52]

I was also able to claim for my retaining wall. Mine was classed as part of the build as it was needed to form the driveway. 

 

[newhome]

14 minutes ago, Adam2 said:

I'm doing a re-build and need to ensure we fit the requirements for 0% VAT.

 

What does your planning permission say? Does it say a demolition and new build / replacement dwelling? It can't say renovation or alteration or you will be refused the VAT reclaim anyway unless you alter the PP but do this before you start. Note that HMRC do not appear to accept retrospective alterations of PP for VAT reclaim purposes. 

 

According to HMRC a building ceases to be en existing building if:

• it is demolished completely to ground level or
• the part remaining above ground level consists of no more than a single facade the retention of which is a planning condition. 

If the retaining walls are not part of the structure of the house it would seem to be ok but if they are then that could be possible grounds for refusal in my view. Without seeing the plans it's a bit hard to imagine however. 

 

[Adam2]

Thanks, yes it is approved as a new build so that part is ok. It's really a question of whether a retaining wall which forms part of the house at the moment is classed the same as say the slab or foundations or basement which as far as I can tell are ok. A retaining wall is below ground on one side but above on the other....

 

 

[newhome]

How would HMRC know that you had retained the wall? If the plans don’t specifically say they wouldn’t know would they? 

[Jeremy Harris]

The simple answer is that if the retaining wall is on the plans, and is required in order to build the house or the access to it, then it can be zero rated.  If the retaining wall isn't needed in order to build the house or access then it most probably can't be zero rated.  The exception to that would be where there is a retaining wall in a garden that formed a part of an approved landscaping plan, that formed part of the planning approval, when it would be zero rated.

 

The general rule of thumb is that if something is integral to the structure of the house or access then it's zero rated.  Anything that falls into the zero rated category is eligible for a materials VAT reclaim on completion.

[newhome]

4 minutes ago, JSHarris said:

The simple answer is that if the retaining wall is on the plans, and is required in order to build the house or the access to it, then it can be zero rated. 

 

This isn’t the question though. The retaining wall is already there and part of the existing house. The question is whether this wall can be retained (a retained retaining wall ?) and the property still be eligible for a vat reclaim. HMRC have very strict rules about what is determined to be a new dwelling vs an alteration / refurbishment that would make it not eligible. 

 

 

[Jeremy Harris]

Just now, newhome said:

 

This isn’t the question though. The retaining wall is already there and part of the existing house. The question is whether this wall can be retained (a retained retaining wall ?) and the property still be eligible for a vat reclaim. HMRC have very strict rules about what is determined to be a new dwelling vs an alteration / refurbishment that would make it not eligible. 

 

 

 

As I understand it, the retaining wall is a part of the stepped foundation, though, isn't it?  If so then it's fine, as long as all the above ground walls of the old house are demolished, as HMRC allow the retention of the foundation when rebuilding on the same plot.

 

My concern wouldn't be HMRC, it would be whether the existing stepped foundation and integral retaining wall is structurally and thermally OK for the new build.

[newhome]

I couldn’t tell from the post if any of the walls were above ground or not but if they are not then that would be fine. I don’t think HMRC would even know anyway unless you mentioned it. It would only really be evident if the PP or detailed plans noted that certain walls had to be retained. If not they would be none the wiser. 

 

 

[Adam2]

2 hours ago, JSHarris said:

 

As I understand it, the retaining wall is a part of the stepped foundation, though, isn't it?  If so then it's fine, as long as all the above ground walls of the old house are demolished, as HMRC allow the retention of the foundation when rebuilding on the same plot.

 

My concern wouldn't be HMRC, it would be whether the existing stepped foundation and integral retaining wall is structurally and thermally OK for the new build.

 

Thanks, yes I think that is a good way to look at it - being part of the stepped foundation.

 

Maybe an option is to build a new retaining wall (planning an ICF build) in front of this preferably on a passive slab - subject of course to all the usual agreements...

[Temp]

See.. 3.2.1

 

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

 

A qualifying building is constructed when....

 

Doesn't help a lot but does allow cellars to be retained.

Edited October 15, 2018 by Temp