We had permission for a renovation/conversion of an existing 2 bed bungalow in to 4/5 bed dormer. When carrying out the work we knocked a lot more of the building down than we had permission for due to unforeseen collapse and foundation movement.

Planning came out and were going to make us apply for new build permission as the original permission was no long correct. After discussion they decided to let us carry on with the renovation as long as we built off the existing foundations. All that remained of the original building was one gable wall. We spoke to planning to see if we could change the permission from renovation to new build to enable us to claim the VAT back. They explained that we would have to reapply for this and if unsuccessful (highly unlikely but not 100% certain) due to objection and such like, we could be left with a property will no permission which we would have to take down.

Too big of a risk to take, I am sure you will agree?

We went to one of your shows at the NEC and got some advice from David Snell, who said all we needed to do was convince HMRC that it was now a new build due to so little of the original remaining. So we sent all the invoices to the HMRC, with build regs sign off and an explanation as to why it should be viewed as a new build. They replied saying it didn’t qualify due to some pictures we sent showing an internal wall, which meant we didn’t qualify.

I asked for another person to look over the case from HMRC, and explained that the internal wall was taken down once the new external walls were built as it was only there to support the remaining gable. The new person looked over the case and still decided that we didn’t qualify to claim the VAT back.

We have now gone to appeal and are waiting a response. Is there any advice you can offer please?


  • Daisy Jeffery

    In the VAT Notice 708 (Buildings and Construction) document, the key section that governs the area of dispute, demolition and rebuilding is Clause 3.2.1. The clause states that in order to qualify for zero-rated VAT “the new building makes use of no more than a single façade (or a double façade on a corner site) of a pre-existing building, the pre-existing building is demolished completely (other than the retained façade) before work on the new building is started and the façade is retained as a condition or requirement of statutory planning consent or similar permission.”
    There are three conditional clauses and they all have to be satisfied if your claim for zero-rating of VAT is to stand. Were there an “or” instead of an “and”, your claim to get the VAT back would almost certainly be successful. However, it’s not enough to retain a façade as the first clause suggests; the third clause insists that the retention of the façade is a condition of planning or similar. Yours was not a planning condition, as you didn’t re-apply for planning permission after the nature of the job changed. You may also be falling foul of the second condition in that you appear to have started work before demolition was complete. In your case, the demolition came about by accident.
    Your best bet is to show that the façade was kept in place for a reason beyond your control, i.e. health and safety. Without knowing the full details of why you came to keep the gable wall in place, it’s hard to know whether your claim will stand.

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