A Guide to Reclaiming VAT

Are you aware that it is possible to reclaim some of the VAT of building materials and services if you build a new home? It can really add up, which is why you should consider doing it. However, as with all these things, the rules can be somewhat complicated. Here are some pointers for helping you get started.

1. When and What Are You Able to Reclaim VAT On?

The purpose of this article is not to provide a comprehensive list of things that you can or cannot claim for. It is subject to change and it is advisable to always check the most current details with the government authorities before embarking on your project.

A new building can only qualify if it is self-contained, separate, and should be for you or your family to either live or vacation in. So, buy-to-let properties don’t count, and if you plan to just build to sell at a profit, this won’t count too. Businesses typically do not count, but you can have a room for your home office.

It is possible to reclaim VAT on most materials for the build. However, you cannot reclaim VAT on professional services such as your surveyor, architect, or project manager. Builders are different. It is also not possible to claim against equipment hire.

2. Your Builder Vs. VAT

All construction work on a new build should be zero rated. So, there shouldn’t be VAT on the bills or quote from the builder. Just to be clear, you cannot reclaim VAT where none has been charged in the first place.

The builder may reclaim VAT on materials bought for a new build as long as they are VAT registered. You cannot reclaim VAT for materials provided as part of the services. So, if materials are included as part of the builder’s service, ensure that you never pay VAT.

3. Budget Accordingly

Prior to commencement of the project, it is important to be clear whether you will be reclaiming the VAT on materials or whether you will be getting the materials through the building thus paying no VAT.

If you plan to reclaim the VAT yourself, it is important to keep in mind that you still have to pay up front for things inclusive of VAT. You thus need to have those funds available as you go. You cannot reclaim the VAT until the project is completed. You need to provide proof that it is complete such as a letter from a local authority.

If the cash flow is tight, the better option would be to find a builder that can charge you for materials without VAT as you go. You are required to reclaim the VAT within 3 months of the completion of the project. You can expect to receive the refund within 30 days of submitting the claim.

4. It is Very Important to Keep Records

You have to keep a very accurate record of all that has to do with the build. You will need to provide building plans, planning permissions, credit notes, bills, invoices, etc. You have to provide originals and not just copies of all of the expenses. Emails confirming orders or electronic payment receipts are not valid VAT invoices.

Ensure that the record of payment for anything you wish to reclaim VAT on includes the name of the supplier, invoice date, VAT number, a description of the services or goods provided, and the value of the invoice.

It is up to you to ensure that VAT is correctly applied. So, check all the paperwork carefully.

5. Ensure That You Get the Proper Advice

You are only allowed to make one claim and mistakes can be hard to correct. So, ensure that you get it right the first time.

While the builder or tradesperson should ideally know the VAT rules, not all actually do. Be wary of taking their advice before you double check. After all, it is you that could end up out of pocket if you don’t get it right. Here’s how it’s done according to pros VAT Global

The numbers involved are often enough to make it worthwhile to get the help of a VAT reclaim expert to ensure that you claim back everything possible.

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

shares