We have been reading a lot about reclaiming VAT. We purchased an old, derelict farmhouse near Ampleforth in December 2015. On 5 June 2017, it was unoccupied for two years. We obtained the necessary planning permission and we have just started to work in the project (we actually started on 5 June 2017). This will be our own family home once it is finished. The farm was a commercial poultry farm, which will be now converted into a family home. The chosen builders are self-employed and are not VAT registered as they are a small family company (father and son). We are effectively project managing the build ourselves, helping the builders as extra labourers and ordering materials, paying the subcontractors (plumbers/ electricians), etc. We have tried to read through VAT Notice 708 (section 8), but our understanding is that this relates only to builders and what they should charge their client (5% reduced rate under the two year 'unoccupied' rule). It doesn't stipulate whether self-builders are eligible under the 'two year' rule. We asked HMRC for clarification, and they kept referring to VAT Notice 708 s8 and could not give us an answer, although our architect seems to think that we should be able to claim the reduced VAT rate. The garage block is all new (it was not there before), the house is being extended significantly and it will be completely renovated. We are doing the work and paying for the materials. Are we eligible under the two years ‘unoccupied’ rule? We have the relevant letter from the Council stating that the house has been empty for two years. We obviously need to understand whether or not we can reclaim any VAT on the project (as the savings would be significant).

Arthur Weller replies:
As far as your builders are concerned, if it is true that their turnover is less than the VAT threshold of £85,000, then they do not need to charge VAT, and it is not your concern. As far as the VAT on your own expenditure on materials is concerned, you should look at http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/487894/VAT431NB_form_and_notes.pdf%20 and www.gov.uk/government/uploads/system/uploads/attachment _data/file/487887/VAT431C_form_and_notes.pdf regarding the VAT DIY scheme rules.