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Q&As
Can I Reclaim VAT on a Partial Knock-Down and Rebuild?
I am considering buying a house with planning permission to knock down and build a 1,871 sq ft new house. However, a small part of the existing house (about 20%) is listed and has to be retained and refurbished.
I cannot work out whether I can reclaim the VAT on this project, since it says on the guidance that if any part of the existing house is retained, VAT is not reclaimable. The retention of this section is a requirement by the planning department.
The architect has designed a contemporary glass corridor joining the new house to this smaller section of the old one. This issue is a deal breaker and neither agent/architect or planning office has given me a clear answer.
One Answer
Despite having a planning condition requiring you to retain 20% of the property, this would have no bearing on the VAT reclaim unless it referred to retaining a facade (or two on a corner plot) but it sounds like you are obliged to retain more than this.
Similarly, the listed status of the remaining part of the property is irrelevant so with regard to your situation, I would say VAT will be payable on the whole project.
The rules are open to interpretation and there are some exemptions, so you should try calling the VAT DIY helpline to see if there as any way you might claim exemption or some relief. The number is 0300 200 3700.
– Mike Hardwick, Build It expert