I have a scenario which I feel may fall into a slightly grey area within the guidance for reclaiming VAT on a new-build:
We have a house with detached annexe for my mother, all on a single title deed. The annexe was built last year (full rate of VAT was paid) as there was a condition on the planning permission that stated that the annexe was ‘ancillary to the main dwelling’.
So far so good. However, our plan was to renovate the farmhouse. After moving my mother into the annexe, we began stripping the house back for renovation and it soon became clear that a re-build would be a more sensible option! We have been granted planning permission, without any conditions other than a time-limit and style/materials.
As we plan to begin building in March, I have just downloaded the HMRC document (see link below) that contains the VAT reclaim form and guidance.
http://customs.hmrc.gov.uk/channelsPort ... e=document
I am concerned by para 13 (page 5) which talks about separate disposal/use of the building.
The declaration that needs signing says quite specifically ‘Do the terms of your Planning Permission (or similar permission) prevent the separate disposal, or separate use,
of the new building from any other pre-existing building?’. The factual answer to this question is no because there is no such term in my planning permission. However, although not specifically stated, it would seem logical that as the annexe cannot be sold separately, neither can the main house.
The problem has arisen because usually an annexe would be built after the main dwelling and not before. If we had built the house first at a zero rate, and the annexe after at the standard rate, there would be no problem. If I sign the declaration and crack-on, surely the outcome would be the same?