HRI tax credit with grant.

This question is best illustrated via an example.

Suppose somebody undertakes some work on their home via HRI qualified contractor.

Plumbing: €11350 (i.e. €10,000 + 1350 VAT)... Grant of €700 euro received.
Extension: €22700 (i.e. €20,000 + 2700 VAT).
Windows: €11350 (i.e. €10,000 + 1350 VAT).

In the above case I would assume the full €4050 tax credit would be available.

However a revenue helpline has indicated that this tax credit is reduced (due to grant being received).

This does not make sense to me. As I am in effect being penalised for making a claim on my plumbing. If I did not make the plumbing claim or if i did not give my details to the contractor or in fact if the plumbing contractor was not registered with HRI - then I would have been better off. As I would have be able to claim the fill tax credit of €4050 euro.

Could this be true?

Or you sure they don't mean you reduce the payment amount re plumbing by €700 and then calculate the VAT on the reduced figure which will then be used for your tax credit claim?

Learner2015 said:

Or you sure they don't mean you reduce the payment amount re plumbing by €700 and then calculate the VAT on the reduced figure which will then be used for your tax credit claim?

Click to expand...

The amount of XXX restricted because of Grants received will not be claimable in your next claim - maximum you can claim is 4050 less XXX.

I have questioned them on this as it does not seem fair to me.

Seems ridiculous, what normally helps when dealing with Revenue is to call back and speak to someone else, more often than not you get a different answer!

OP the below is from the Revenues website re the HRI scheme and they calculate it differently from you have been told.



1.7.1. How much qualifies if I receive a grant or an insurance payment for the works?

Qualifying expenditure (over €4,405 plus VAT per property) will be reduced by three times the amount of any grant for the works.

For example -

€8,810 plus VAT (at 13.5%) of €1,190 = €10,000 was paid for external wall insulation

€2,700 was received under a Better Energy Home Scheme grant[broken link removed]

The €10,000 will be reduced by €8,100 (€2,700 x 3)

Leaving €1,900 (€10,000 less €8,100) qualifying expenditure

This €1,900 includes VAT of €226

The tax credit can be claimed on the €1,900 less €226 = €1,674 (before VAT).

The tax credit is €1,674 x 13.5% = €225.99.

I have seen this example and they explained the x3 to me. I am fine with that and the example above.

Lets lets suppose 2 different people get the exact same 2 job done.

Job 1). As in 1.7.1 above.

Job 2). For simplicity lets say it costs €34,050 (€30,000 + €4050 VAT). From this job alone I have enough VAT paid to qualify for the full tax credit of €4050. I have also received no grant for this job.

Person 1). does a HRI claim for 1 and 2... Revenue say credit will be less that €4050 (due to grant).

Person 2). does a HRI claim for job 2 only (and does not claim for job 1.... simply by not give their details to contractor).... tax credit will be €4050.

My feeling is that you should be entitles to the full tax credit - assuming you have enough "qualifying expenditure" on subsequent work.

A common sense approach to me would be that. A grant payment for a particular job could and would effect the amount of tax credit available as a result of that particular job. In may even result in a zero credit being available for that particular job.

However, it should not effect the tax credit available for separate unrelated jobs (for which no grant was payable).

Yeah it seems crazy, I really think you should try someone else in Revenue. As you say you are already at the max with you extension and windows work so it makes no sense (and is unfair) to reduce this by plumbing amount.

Based on their example an if you left out the max ceiling they wouldn't be reducing it by the grant amount anyway you would just get less credit cause of the lower VAT when you use the 3 times multiplier.

Its has to be that the person you spoke to in Revenue has got it wrong.