Monday 12th July 2010 - Published by Kelly Jackson - Communications Executive
HOLIDAY HOMEOWNERS GET A BREAK FROM VAT
VAT expert BVC Associates Ltd, has revealed that homeowners who have built or converted buildings into holiday homes in the last four years can now reclaim in the region of £20,000 in VAT that was previously lost to the taxman.
A recent case which resulted in victory for the taxpayer means that anyone who constructed a holiday home after 2006 can recover the VAT they paid on building materials and building services from HMRC, which is likely to mean a rebate of tens of thousands of pounds back to the owner.
Since the introduction of the “VAT – Do It Yourself Builder’s Scheme” in 1974, HMRC has accepted reclaims for VAT incurred by individuals on the purchase of builders’ materials used to construct or convert houses for main residence in the UK, but not for 'holiday homes'.
However, following a recent case won by the taxpayer, HMRC has now invited other affected taxpayers to submit retrospective claims for VAT incurred on either building a new holiday home or converting a building into a holiday home.
Andrew Rimmer, Managing Director at BVC Associates, explains: "If HMRC have previously refused your claim for the VAT you incurred to build your holiday home, or you have never submitted a claim, you can now do so and can expect to reclaim a substantial sum. Claims are valid where the holiday home was completed in the last four years and you have the invoices from the builders and receipts for the purchase of materials as proof that you paid the VAT".
The claim relates to materials bought separately from building services for the construction of new holiday homes, but relates to both materials and building services for the conversion of a non-residential building into a holiday home. A claim can be submitted for all holiday homes completed in the last four years, and, because HMRC has amended its policy with retrospective effect, all claims should qualify for Statutory Interest on the sum previously foregone, because it is a case of “official error”.
A home is classified as used for holidays where a covenant or planning application constraint denies the occupier use of the home throughout the year.
Andrew Rimmer, Managing Director, BVC Associates Ltd
