Commentary

V7.397 DIY housebuilders—lower rate VAT charge (5%)

Part V7 Tax planning
Part V7 Tax planning | Commentary

V7.397 DIY housebuilders—lower rate VAT charge (5%)

Part V7 Tax planning | Commentary

V7.397 DIY housebuilders—lower rate VAT charge (5%)

It is only possible to reclaim correctly charged VAT under the DIY scheme. Certain construction services supplied by a builder will be eligible for a VAT charge at 5% rather than 20%, eg when a non-residential property is converted into one or more single house dwellings.

If the builder is unaware of the reduced rate charge, and adds VAT at 20%, then HMRC will reject the DIY claim because it can only repay correctly charged VAT. See Example 5.

Example 5

John has bought the freehold of a public house and has obtained planning permission to

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