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VAT and Conversions

Category: Barn Conversion Journal September 23rd, 2012 by mbc

I was tweeting the other day about VAT on conversions.

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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