In the recent appeal to the Upper Tribunal by HMRC against the decision of the First-tier Tribunal in the case of Patel it was held (overturning the decision of the First-tier Tribunal) that receipt of a backdated planning consent for the construction of a new dwelling after the 3 month time limit had elapsed for the making of a DIY builder’s VAT reclaim was not sufficient to make the DIY VAT reclaim valid for repayment.

Mr Patel had originally received planning permission for the enlargement of an existing dwelling however the dwelling was actually fully demolished and a new dwelling constructed. The local authority was aware that a new dwelling was being built. Upon completion of the works Mr Patel submitted a DIY builder’s VAT reclaim to get a refund of VAT on the building materials he had bought. HMRC rejected the claim saying at the time fo the claim there was no planning consent for a new dwelling.

Mr Patel obtained retrospective consent for the dwelling. The local authority dated the consent in 2009 before the works commenced. The First-tier Tribunal decided this was sufficient to make the VAT reclaim valid. The Upper Tribunal in overturning this decision held that as the consent was not produced before the end of the three month time limit allowed by the VAT regulations for submitting a DIY builder’s VAT reclaim and therefore the refund of VAT to Mr Patel could not be made.

This case again highlights the need to ensure the VAT rules are understood from the outset of any building project.