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considered whether more than one single VAT refund claim was available under the DIY housebuilders scheme when a build is split into two specific phases, plus the timing of HMRC’s repayment. It questioned whether HMRC was right to pay out in the first instance on completion of phase 1 or if that initial claim should have been treated as ineligible. If the initial claim was ineligible, then the door was open to submit a later claim on completion covering both phases of the work. The tribunal also considered whether claims for extensions to existing works (phase 2) could be eligible. 

Mr Lawton undertook a project to convert a barn into a residential unit. In principle a VAT refund claim can be submitted to HMRC, but claims will only be paid if they satisfy strict criteria. 

Unfortunately, Mr Lawton’s project was impacted by the Covid-19 pandemic. He experienced unexpected difficulties procuring materials and labour due to supply chain issues and the restrictions that had been put in place. Costs also started to rise beyond the quoted pre-pandemic prices.

Mr Lawton attempted to manage this situation by splitting the project into phases. He obtained a completion certificate once the initial barn conversion phase of the project was complete, and quickly submitted his first VAT DIY refund claim to HMRC. This first claim was paid. Mr Lawton subsequently completed the phase 2 work to extend the conversion works. Upon completion, Mr Lawton submitted a second VAT refund claim to HMRC, with different planning permissions, which was later rejected. 

Mr Lawton represented himself at the tribunal against HMRC. Whilst sympathetic to his situation, the judge agreed that HMRC was correct to settle the first claim when it was made, and the subsequent second claim was ineligible as it related to extension works, which are specifically not eligible under the scheme. Had the project been completed as originally intended, it is likely that the work would have been eligible for a refund as it comprised more than an extension to the phase 1 work.

There are a lot of nuances within VAT law and HMRC practice and had Mr Lawton not split the project into phases, it is likely that HMRC would have approved a claim for the total project under one single claim. Ultimately, the key takeaway from Mr Lawton’s case is it can be a worthwhile investment to obtain advice from a VAT advisor to ensure the rules are understood and that VAT refunds are maximised by both timing them right and ensuring that the criteria are met.