Tax windfall for DIY devotees

Property owners who renovate their own homes and buildings may qualify for a new tax break. A High Court decision made in the last month could lead to repairers of specific properties reclaiming VAT already paid on such building works.

The windfall applies to people who convert any commercial property into residential use, where previously there was also already some residential accommodation. This would most frequently happen when there was a flat above a shop, or where the ground floor used to be a pub.

This latter instance occurred in the case, Customs and Excise versus Blom-Cooper, which led to the decision. Normally VAT can be reclaimed when a whole building, which used to be a commercial property, is converted into a residence.

Customs at first refused to pay the taxpayer in this case though since part of the property was already used as a residence, so the conversion work did not qualify. The High Court over ruled this, meaning Customs will now have to repay the VAT levied.

David Hatch, director of VAT at accountant PKF said, ‘Anyone who has been refused payment of VAT for DIY work in similar circumstances, should re-submit their claims on the basis of this decision which is binding on Customs.’ PKF can be contacted on 0151-708 8232.

20/08/02