I was tweeting the other day about VAT on conversions.
If you're contemplating a barn conversion take a look at this…it could save you a few quid. http://t.co/euC1e5Pv via @sharethis
— Scarratt and Martyn (@ScarrattMartyn) September 21, 2012
@ScarrattMartyn @ShareThis not one to defend hmrc BUT they're BOTH right, you DO pay 5% VAT on a conversion, BUT can claim it back
— martinJf (@barnconversion) September 21, 2012
@barnconversion @ShareThis I think most are aware of the 5% rule but the 0% for buildings redundant more than 10 years is a well kept secret
— Scarratt and Martyn (@ScarrattMartyn) September 21, 2012
@ScarrattMartyn @ShareThis it's pretty clear on the hmrc website, but I guess most people have an aversion to anything hmrc related!
— martinJf (@barnconversion) September 21, 2012
An article in Homebuilding Magazine titled (somewhat harshly) ‘Incompetent Inland Revenue, helpful H&R‘ provided the ‘revelation’ that the conversion of a building that hasn’t been occupied for 10+ years (or ever) is VAT exempt. Although 5% VAT is payable during conversion it can be reclaimed at the end of the project.
Personally I thought that was bloody obvious.
HMRC provides the following guidance (a simple Google search on “VAT on conversions” will get you there):
Where the building is a conversion, it must be of a non-residential building. That means a building that has either never been lived in, or hasn’t been lived in for the last ten years – not even on an occasional basis as a second home. Illegal occupation by squatters doesn’t count, however, and you are allowed to live in the property while the work’s being done, as long you move in after the work has started.
From – VAT refunds on self-build new homes or non-residential conversions
I don’t know, but perhaps, equating conversion to self-build, this level of lazy ‘uninformation’ is what holds back the UK from anything but novelty levels of self-build.
My question is…. is it too much to ask people to do their homework when undertaking one of the largest investments of their lives?
(Hope I’ve not just jinxed my own VAT reclaim with my wise-ass comments…)
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