Renovation VAT rate

[RHMurr73]

I own a VAT registered limited company, but unrelated to construction, trades or property in general.

I am carrying out some DIY renovations to my own house and I want to find a way to take advantage of the 5% VAT rate on materials that builders normally have. I admit that don't fully understand how this convoluted scheme works. The property has to have been uninhabited for the previous 2 years which does apply in this case.

1. Would I get away with purchasing materials through my company for this purpose? To be clear, I am not looking to claim this on expenses as it isn't business related. For accounting purposes the purchases would be a directors loan.

2. Since I am currently registered with the flat rate VAT scheme, is there actually any advantage to this?

 

[GLAbusiness]

Sounds very dodgy to me. The company does not have any business reason for making the purchase.

 

[UK Contractor Accountant]

the 5% VAT rate on materials that builders normally have

the builder gets charged 20% for materials and claims it back on their tax return and then invoices out to the customer at 5% if the work qualifies for reduced vat rate.

They dont get the 5% rate from the builders merchants.

 

[RHMurr73]

Sounds very dodgy to me. The company does not have any business reason for making the purchase.

It's either allowed, not allowed, or unclear with no case law. But it is unlikely I am the first person to consider this, so I expected that there would be relatively clear guidance somewhere.

the builder gets charged 20% for materials and claims it back on their tax return and then invoices out to the customer at 5% if the work qualifies for reduced vat rate.

They dont get the 5% rate from the builders merchants.

That's how I thought it works. So if I am on the flat rate scheme and not reclaiming the original purchase VAT then I / my company would not see any benefit (?)

 

[RHMurr73]

For accounting purposes the purchases would be a directors loan.

Correction: the company would need to invoice me personally (if this was viable).

 

[DWS]

No benefits at all, even if your Company moved into construction, because you are on the FRS then no input VAT can be claimed, the Company still needs to invoice you for the works plus 5% VAT and then has to pay HMRC whatever rate FRS it is on.

 

[bodgitt&scarperLTD]

Sounds very dodgy to me. The company does not have any business reason for making the purchase.

This is the only answer OP really needs.

Can you claim it in a convoluted way? Probably. Will you be dragged over the coals and shafted without lube when they find out? Most definitely.

If you're going to do something like this, do it for a life changing amount that buys you a ticket to another jurasdiction. Not to save a few quid on a renovation!