VAT update - DIY housebuilders

Business Brief 22/2005 includes important information for DIY housebuilders who may be making claims in complex scenarios whereby they convert buildings which had been used partly for residential purposes and partly for non-residential purposes in the past.

In broad summary, such housebuilders can reclaim VAT but only on the expenditure that relates to the non-residential part of the building being converted. The business brief, however, acknowledges an inequality between the DIY housebuilder and a developer in the identical situation. It continues to be the Revenue's view that VAT recovery is not possible for developers of residential units which incorporate a previously residential part.

This situation is inequitable and defeats a major principle of the DIY scheme, that it should put the DIY housebuilder in the same effective position as the developer. It seems possible, therefore, that this may spawn challenges from developers seeking the same treatment as has now been given to the DIY housebuilder.

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