The First-tier Tribunal has dismissed an appeal against HMRC’s rejection of a claim for input VAT in respect of a free-standing construction in the grounds of the appellant’s house, holding it to be an extension to the existing property and not a new dwelling (Dunne v HMRC  UKFTT 88 (TC)).
The DIY builders scheme allows for a refund of input VAT on “the construction of a building designed as a dwelling”. However, relief would not be available for “any enlargement of, or extension to, an existing building”.
Mr Dunne had initially applied for and received planning permission to build an extension to his property for himself and his terminally-ill wife. However, he had subsequently agreed with the local authority that the connecting corridor could be omitted. Because of his wife’s prognosis, this was accepted on an informal basis. The final construction was described as a detached bungalow and Mr Dunne considered that this created a separate dwelling.
However, the statutory requirements for a claim included that planning permission had been granted in respect of a dwelling and that the construction was in accordance with that planning consent.
The planning permission granted was for an extension of the existing building and not for a separate dwelling. Furthermore, correspondence with the council showed that the removal of the connecting corridor was not considered to create a separate dwelling, post-completion paperwork continued to refer to the works, as amended, as an extension to the main property, specifically as “an extension … not attached to your main house”.
The appeal was therefore dismissed.