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Q&As
Can I Reclaim VAT on a Shell Build?
We are in the process of buying a shell build (with no interiors). The plumbing and wiring has been done but it is a shell structure ready to decorate.
Where does this leave us for paying VAT on things like kitchens and bathrooms as the property has never had them before?
One Answer
I think the answer is yes, as VAT can be reclaimed from a new build project purchased from a developer as an unfinished shell.
To clarify what that means, VAT Notice 431(NB) Note 10 states:
A shell is a building that is structurally, but not functionally, complete.
It will possess all the basic structural features (such as the walls, roof, doors, windows and utilities connections) but will lack some or all of the facilities that will allow it to function as a modern dwelling.
This will include work to install fixtures and fittings such as kitchen furniture and other essential features. If the only work required to be done is to decorate the building, the house is considered to be both structurally and functionally complete and VAT on the costs of decoration may not be recovered.
We will need documentary evidence demonstrating that the property was handed over to you as a ‘shell’. Examples of evidence include:
• the Building Agreement
• the purchasecontract
• handover documents
• a 10-year home warranty ‘homeowner’s endorsement schedule’.
I would check you qualify by calling the VAT DIY Reclaim helpline on 0300 200 3700
Mike Hardwick, Build It expert