Planning Permission and the D-I-Y Builders Scheme

The First-Tier Tribunal heard an appeal by Scott Kernohan in relation to HMRC’s decision to reject a claim under the DIY Builders Scheme in respect of work carried out at a residential property for which HMRC stated that valid planning permission was not held, and therefore the refund could not be granted.

 

The appellant obtained planning permission for proposed works at the site that were described as “alterations to an existing bungalow”, including the addition of a rear extension. On discussing these plans with the Council, it was agreed that it would be better for the stability of the house to clear the existing structure and rebuild a “replacement chalet dwelling and new double garage in its place”.  Unaware that the existing planning permission did not cover the replacement of a dwelling with a new build, HMRC queried this and retrospective permission was obtained by the Appellant.

 

VAT legislation states that in order for the Appellant to submit a valid claim “his carrying out of the works is lawful” by way of having appropriate planning permission. Due to the present tense used in the law, this was interpreted to mean that the works must be lawful at the time they are carried out. The appeal was therefore dismissed and as a result, no refund of VAT incurred on the construction was due.

 

The requirements for the DIY Builders Scheme are strict and cannot be waived or modified retrospectively and so to avoid falling foul of VAT legislation, speak to one of our VAT consultants on our free helpline to determine what criteria needs to be satisfied at each stage of the building works.

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