It is a constant source of frustration for many of my clients that they have to pay VAT at 20% whereas a new house build is 0% VAT rated. For those of you who are fortunate to be able to buy a ‘project’, it is worth considering whether you might be able to get HMRC to agree to a reduction of the VAT down to 5% if the property has not been lived in for over two years.

I am not qualified to provide you with any financial or accounting advice, but you could seek this advice elsewhere if you wish to do so. HMRC will often allow a reduction in VAT payments for some aspects of property repairs where it can be proved that the property has not been lived in for in excess of two years prior to the work starting.

On this basis, it might be possible to obtain a reduced VAT payment on the costs of labour and materials for the building fabric repairs. The usual VAT rate of 20% can be reduced to 5%. This could be a significant financial saving. You will need to obtain specialist VAT accounting advice on this subject concerning the details of what the VAT reduction relates to.

In order to do this, HMRC will require proof of the lack of habitation by one of the following means..:

  • Council Tax data – a reduced rate is usually charged on empty dwellings

  • Electoral Roll – confirming that no one was registered to vote at that address in the last two years

  • Empty Property Officer – does a letter exist with the relevance dates of last occupation mentioned..?

  • Utility company bills – heating, water, electricity etc…

HMRC will not accept a letter from a third party such as a solicitor or accountant etc. The owner simply saying that it hasn’t been occupied for over two years would not be acceptable evidence either.

It is worth making some enquiries and seeking professional VAT advice elsewhere if this applies to you

Disclaimer:   Anything posted in this Blog is for general information only and it is not in any way intended to provide any advice, legal or otherwise, on any general or specific matter that you can rely on.  You should always seek your own legal advice.