When Is a Property 'Completed'? DIY House Builder Wins VAT Rebate

DIY house builders are entitled to refunds of VAT they pay on materials used in their projects. However, as a decision of the First-tier Tribunal (FTT) showed, seeking such rebates is far from straightforward and a strict time limit applies.

A man applied for a VAT refund after self-building a house for himself in the grounds of his father's home. HM Revenue and Customs (HMRC), however, refused the application on the basis that it had not been made within three months of the property's completion, as required by the Value Added Tax Regulations 1995.

In appealing against that decision to the FTT, the man argued that his application was in time because it had been made within three months of a formal certificate of completion being issued. He had phoned the HMRC helpline twice and been informed that he should wait until he received a certificate of completion before applying for a rebate.

HMRC argued that completion of the house was achieved at an earlier date on the basis that the man had moved in over a year before making his refund application. Although the house had at that point not been connected to a permanent water supply and had yet to pass a permeability test, it was nevertheless habitable.

In upholding the man's appeal, the FTT found that, for the purposes of the Regulations, completion of a house takes place when a certificate of completion is issued or, if there is no such certificate, on such other date as may be evidenced by documents produced to HMRC by the taxpayer which HMRC are prepared to accept as satisfactory evidence of completion. As the man's application was made within the three-month time limit, he was entitled to the refund.