Readers' forum : House visit

My builder client is the sole director and shareholder of a limited company and recently had a VAT compliance visit from HMRC. The officer noticed that input tax had been claimed on building materials relevant to a new house my client built and moved into with his wife two years ago. The input tax of £30 000 was claimed on 2014 VAT returns so the officer can assess tax within the four-year assessment period.

The officer has asked for our comments on the claim – his intention is to disallow the input tax as being relevant to a private expense. My thought is that if the company raised a belated sales invoice to the director for the cost of the materials and say £1 000 for labour the total fee would be zero-rated and therefore the materials could be claimed as input tax. Alternatively could...