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J Radcliffe (TC4230)
The taxpayer demolished a bungalow apart from an inner cavity wall, and then rebuilt the property.
He applied under the DIY scheme for a refund of VAT incurred on the construction costs, on the basis it was new building.
HMRC refused, insisting the building had been converted and was not eligible for the scheme under VATA 1994, sch 8, group 5, note 16.
The taxpayer appealed.
The First-tier Tribunal noted that the only way the taxpayer could obtain planning permission on the original building was by applying for an extension; the local authority would not permit its demolition.
The VAT legislation was clear: the whole building had to be demolished for the DIY scheme to apply.
The taxpayer’s appeal was dismissed.
