HMRC & VAT Issues- Converting/refurbishing a family home property into HMO

[Sammy79]

Hello,

I hope someone might be of help here.

I am presently converting and at the same time refurbishing a mid-terraced property into an HMO. The property has been in use as a family home. The conversion bit will be making an extra toilet and an addtional bedroom. Whilst I am yet to get the license, the Local Council have been very helpful, providing the requirements and will be inspecting the property once it is completed before letting. Now the tricky bit is with the Builder charging me 20% VAT on all of his charges but I am not sure if this right thing for him to do considering the nature of the project. I'd thought I will be qualifed for reduced rate i.e may be 5%- 15%.

Additional info: I intend living in the property over the summer before finally letting the whole out sometime in September. I hope to have lodgers in the mean time and operate as a live-in landlord. Could this have any implication on VAT payable at this stage or reclaimable in the future?

Every suggestion will be appreciated. Please kindly provide website links if you can.

Regards

Sam

[Grampa]

If the builder is vat registered than he has to charge vat at the going rate. The other option is to find tradesmen who are under the threshold or do a deal for cash

[Richlist]

For other areas of building work where reduced VAT applies .....such as self build new property......one has to pay the VAT and on completion a claim is made to the tax office, supported by receipts and invoices.

I don't know about your situation but I see no reason why it would be any different.

The question is ......do you really want to rely on an unqualified answer from a person unknown on an internet forum for something as important as this ?.....I certainly wouldn't.

In your shoes I'd enquire to.....in this order:

* HMRC/ VAT office

* An accountant.

* Local council department dealing with HMO's

Good luck

[Melboy]

I can half answer this question for you.

The builder has to charge you 20% VAT on all works and goods supplied.

It is then for you to claim this VAT back from HMRC. HMRC will decide whether your claim is submissable or not.

Additional info: I intend living in the property over the summer before finally letting the whole out sometime in September. I hope to have lodgers in the mean time and operate as a live-in landlord. Could this have any implication on VAT payable at this stage or reclaimable in the future?

Yes, you will not be able to claim any VAT back from HMRC even if you are eligible to do so. HMRC will confirm this fact for you.