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Revenue & Customs Brief 29/10

VAT: DIY Housebuilders and Converters VAT Refund Scheme – treatment of holiday homes

This Brief announces a change to the treatment of claims received by HM Revenue & Customs (HMRC) under the provisions of the above Scheme in respect of holiday homes.

The effect of the change

Following a decision of the VAT Tribunal, HMRC now accept that the DIY Housebuilders and Converters Scheme applies to the construction of new holiday homes and to the conversion of non-residential buildings into holiday homes. Any refund of VAT is subject to the conditions of the Scheme being met.

Guidance for the Scheme is attached to application forms as follows:

Both of these forms (including guidance) are available from the Forms section of the HMRC Library.


Individuals who purchase the freehold or long leasehold (over 21 years or 20 years in Scotland) of new dwellings (either newly constructed or converted from non-residential buildings) receive those supplies zero-rated for VAT purposes. On the other hand, individuals who construct or convert non-residential buildings into dwellings for their own occupation, incur VAT on the purchase of building materials and, where conversions are concerned, on the purchase of any conversion services.

Where the dwellings are for their own (or a friend or relative’s) occupation and are not constructed in the course or furtherance of a business, the individuals cannot register in order to recover the VAT and so, to this extent, are disadvantaged when compared to developers.

To address this issue, the DIY Housebuilders and Converters Scheme, which was first introduced in 1974, refunds VAT incurred on the cost of building materials and (where appropriate) on conversion services for private individuals.

HMRC have never applied the DIY Housebuilders Scheme to holiday homes since their supply by a developer attracts VAT at the standard rate. However, a recent decision of the VAT Tribunal (Mrs Irene Susan Jennings – TC00362) has found that the existing legislation does allow the same recovery of VAT on building materials for holiday homes that have been constructed by the individual for a non-business purpose.

As a consequence of this decision, HMRC now accept that claims, for VAT incurred on building materials, may also be made for holiday homes that meet the necessary criteria.

HMRC will also allow claims for a VAT refund on building materials and, where appropriate, services of conversion, where the work has involved the conversion of a previously non-residential building into a home.

How to claim

If you have not submitted a claim before in respect of your holiday home, then you may do so now providing the certificate of completion was issued within the last four years and three months from the date of this Brief. If your certificate of completion is older than this then HMRC regret that your claim is out of time.

If you have, at any time, submitted a claim in relation to a holiday home which was refused in full or in part, for that reason, then you may now resubmit that claim if you wish.

If you are making a claim, please ensure you use the correct form as identified above.

The guidance to the forms is in the process of being amended to reflect this change in policy but the forms themselves will not require alteration.

Exceptionally, where you have submitted a claim in the past, HMRC will accept the original claim form. All claim forms should be accompanied by:

  • planning permission
  • certificate of completion
  • building plans
  • all original VAT invoices, bills and credit notes

Please note that a claim cannot be considered unless the above evidence is provided.

Resubmitted claims should be sent, along with a covering note quoting this Brief, to:

HMRC DIY Claims Unit
Two Broadway
Broad Street
Five Ways
B15 1BG

Further information may be obtained from the Helpline on Tel 0845 010 9000.

Issued 15 June 2010.