VAT related question re self building

A

ApplePie

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Hi all, Apologies if this is in the wrong place. It is a financial question about building so I wasn't sure where to put it!

I read something somewhere (on another board but cannot for the life of me find it now) that I would appreciate your input on.

We are currently deciding whether to build our new home by direct labour or to contract a builder to do the whole job. Obviously one will be a lot cheaper than the other but will take more time, require us to acquire a few new skills etc... Another factor is the VAT issue and this is where I would like your input.

I read that if you cross the border and buy (for example) your plumbing supplies and give your plumbers vat number, VAT will not be charged on the items. In that case, a cheaper product becomes even more cheap.

IF this is true... does the following also apply... I am self employed and have a VAT number myself. Does this mean that I can cross the border and buy building materials and give my own VAT number? Does this mean that I will pay no VAT at all?

If this is the case, firstly is it legal? I think it is highly unlikely that it is legal but am somehow hoping it's just a loophole and there is some way of reducing our build costs.

If it is legal, is there a payback at this end? Like if you buy items online in the US and then pay the duty when the parcel arrives. If there is a payback, does it make it worthwhile to shop up north or would we end up paying the same amount, just by different means?

I appreciate any replies on this. I am NOT trying to pull a fast one and don't want to do something that would prevent me sleeping soundly at night! It is just that it is an interesting option and I would like to explore it to see where it takes us.

Obviously what we'll be building is our house but one of the rooms there will be my office which is the sole premises for my business. If that makes any difference!

Thanks in advance for your replies.
AP
 
...In other words its 100% illegal. If you try it and get caught, the VAT office will treat you as a fraudster, nothing more nothing less...
 
If you pay the vat in the North then you do not have to pay Irish vat as you are in the EU.

However from what I have been told, if you buy the materials for your house in Eire and pay for them yourself you can claim the vat back.

Hopefully its correct as I will be doing this soon.

Charlie
 
CharlieR said:
If you pay the vat in the North then you do not have to pay Irish vat as you are in the EU.

However from what I have been told, if you buy the materials for your house in Eire and pay for them yourself you can claim the vat back.

Hopefully its correct as I will be doing this soon.

Charlie
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would you not have to show the materials are 'work related' if audited?
 
CharlieR said:
If you pay the vat in the North then you do not have to pay Irish vat as you are in the EU.

However from what I have been told, if you buy the materials for your house in Eire and pay for them yourself you can claim the vat back.

Hopefully its correct as I will be doing this soon.

Charlie
Click to expand...
This is not correct, you cannot claim back the vat on building your own home.
 
jem said:
This is not correct, you cannot claim back the vat on building your own home.
Click to expand...

I was told that if I buy the materials for a new build for the builder that I could claim the vat back if the house was for me.

Cheers

Charlie
 
And where were the 3 bears in that story ?

Tell me you do not honestly believe that !

Secman
 
secman said:
And where were the 3 bears in that story ?

Tell me you do not honestly believe that !

Secman
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Yes, I did as I was told by a cousin who built in Meath and has done this. He managed the project and bought the materials for his sub contract labour and claimed the vat back.
 
CharlieR said:
I was told by a cousin who built in Meath and has done this. He managed the project and bought the materials for his sub contract labour and claimed the vat back.
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Doesn't mean he was CORRECT in so doing, I'd love to be a fly on the wall at any future Revenue Audit on his returns. It would be far better , if you are not satisfied with the answers here, to ask Revenue who will very quickly, and without much need for thought, put you straight.

You cannot claim VAT back on a self-supply which is what your own house is. When you are registered for VAT VAT is only reclaimable on genuine inputs purchased for the purposes of exclusive use in ones trade or profession. The so-called "zero rating" of intra-community goods, otherwise known as EU Acquisitions is only available on such goods also for business use. If you were a plumber trading in IRL there is nothing to stop you from buying your supplies in the North. You do not pay the VAT on them, which of course means you do not claim a credit for it. You then charge your customer VAT as normal. This really means a cash-flow difference, plus any real savings from the good being cheaper ( if that is the case) in the North.

I know a case of a builder who built a holiday home for himself. He used his ordinary accounts to do this as he had credit with major suppliers etc. He made sure not to claim any VAT on the purchases as it was not allowable to do so and all of the cost went to drawings. He had a VAT audit some time later. The Revenue auditor minutely reviewed the records to make sure no VAT on that build had been claimed, to the point of reviewing delivery dockets to invoices to see where goods had been delivered. This was even after he had already been careful NOT to mistakenly claim any. The Revenue auditor made it clear that it was not allowable and was satisfied with his dealing on it.

As has been said, multiple times already in this thread, it is not legal to claim VAT on ones own home.
 
From what you have said am i getting this right. He did not pay vat on materials? is that correct?

Also upto certain costs you can avoid paying vat for goods. I bought some goods from Jersey and as they were less than a certain figure and was not charged the vat

Cheers
 
If you claim the vat back on building the house (even if it is for yourself) you will have to pay vat on the total amount of the house when your sell it including the site costs. It will cost you money in the long run.
 
CharlieR said:
From what you have said am i getting this right. He did not pay vat on materials? is that correct?
Cheers
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He paid the full price including VAT on the materials. He did not attempt to claim an input credit on his VAT return for these as this is a self-supply of a non-business item and is not VAT deductible. Just the same as if you or I had a house built by a builder to live in. We cannot claim the VAT.
 
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