VAT & DIY Housebuilders

In the case of McGuire v HMRC, the First-tier Tribunal struck out an appeal against HMRC’s refusal of a DIY Housebuilders’ Scheme claim. The claim had been made well after the statutory deadline. The Tribunal confirmed that it had no power to extend or waive that deadline, however serious the reasons for the delay.
 
The scheme allows individuals building their own home, or converting a non-residential building into a dwelling, to recover VAT incurred on qualifying costs. The VAT regulations require the claim to be made within three months of the building’s completion.
 
The appellant accepted that the claim was late. He explained that his wife had suffered serious injuries when a large metal gate fell on her, followed by a long period of rehabilitation. He asked the Tribunal to extend the time limit and direct HMRC to process the claim.
 
HMRC applied to strike out the appeal. Its first argument was that the Tribunal had no jurisdiction. In the alternative, it argued that the appeal had no reasonable prospect of success. The Tribunal rejected the jurisdiction argument and accepted that it could hear an appeal against the refusal. It then held that nothing in the regulations allowed it to extend the time limit, or to direct HMRC to accept a late claim, on the grounds of exceptional circumstances. The appellant was seeking an outcome the Tribunal could not grant, so the appeal had no reasonable prospect of success and was struck out.
 
The decision draws a clear line between two kinds of time limit. The Tribunal has discretion over procedural deadlines, such as whether to allow a late appeal. In those cases it weighs the reasons for the delay against the prejudice to each side. A deadline for making a claim that is fixed by the regulations themselves carries no equivalent discretion, whatever the personal circumstances involved.
 
For anyone advising on a self-build or conversion project, the three-month deadline should be treated as fixed. It should be diarised from the point completion is expected. Invoices should be gathered as the build progresses, so that the claim can be prepared promptly once the completion certificate or equivalent sign-off is issued.