vat on 2 semidetached new builds

by **cecilgaybody** on Sun Dec 25, 2011 4:29 pm

Hi all,
currently have plans awaiting approval to demolish and replace our house with 2 semi detached, a 3 and 2 bed. The 3 bed the wife and I intend to live in the 2 bed our son. QUESTION: will we be able to claim back vat on both houses and if we do and then in the future sell the 2 bed we have to pay the vat back. Should we keep all invoices seperate for the 2 houses and do we need to register with the tax authorities before commencing. Any other advice warmly received.

by **pawncob** on Mon Dec 26, 2011 10:11 pm

Start here:
http://www.hmrc.gov.uk/vat/sectors/builders/construction.htm

You can reclaim the VAT under the self build scheme for your dwelling. If you register as a developer you can reclaim the VAT for the new builds, but only if you sell them. read Notice 708 very carefully.

by **cecilgaybody** on Tue Dec 27, 2011 11:29 am

I should add we are private individuals and not regular developers

by **spidersong** on Thu Dec 29, 2011 3:00 pm

The DIY scheme requires you to construct a house 'otherwise than in the course of business', so both houses (assuming you're not charging your son for the building works) can be recovered under the scheme even where you yourslef will only occupy one. You will need to make sure that there are no occupation or disposal restrictions i.e. the houses can be sold independantly, but other than that it should be quite straightforward.

As long as it's not the intention from the outset to sell then there's no claw back of previously paid VAT, so if your son decides to move out a few months, weeks, or even days after you finish the project and you have to sell the house then it's still recoverable.