Tuesday, 25 June 2013

VAT and other taxes

The following is the text of a letter I have sent to my MP concerning VAT and other taxes I have had to pay on this house. I think it is sell explanatory! I await a response with interest.

Andrea Leadsom
MP South Northamptonshire
House of Commons

I write to you as a new constituent having recently moved from Brookwood (Woking) to Stoke Bruerne (NN12 7SE). My concern is the VAT levied on me to bring a house back to a habitable status and other taxes.  I believe that I have brought a house back into the useful housing stock of the UK and at the same time left my previous house in good order and condition and now occupied by a young couple.

The house I have bought was described as being empty, unfurnished and unoccupied and as such attracted, at the time of purchase, a zero rating as regards Council Tax. Of course that ended on 01-April due to Government legislation and for some reason, unclear to me, I had to pay the full rate of Council Tax for the period 26-April (date of purchase) until date of occupancy (27-June).  I am entitled to the single person discount (25%) only from the date of occupancy despite the house remaining empty, unfurnished and unoccupied.  In the meantime I have had to find alternative accommodation.

I have undertaken some research and am aware that a listed building is entitled to some exemptions but I find the HMRC Notice 708 so complicated that after reading and re-reading it I find I am none the wiser and I regard myself as being of reasonable intelligence.  Likewise a new build is seemingly zero rated for VAT (again the HMRC notice is complex) but bringing back into use an old (1848 I believe) house which remained empty, unfurnished and unoccupied, is in a conservation area and is, according to the South Northamptonshire Council website subject to an Article 4(2) designation (no permitted development) subject to VAT at 20% on all work seems to me to be an omission on behalf of the Government and, in my opinion, grossly unfair.

The structural report I had commissioned on the house in Stoke Bruerne indicated that the house was structurally sound, had a contaminated water supply and I, along with friends in the industry; believe required complete renovation to bring it up to an acceptable standard.  I was surprised that there was no form of relief, from any source, for me to bring the house back to a habitable standard and back into the housing stock of the country whilst of course retaining the historical aspects of the house especially as regards the frontage onto the Grand Union Canal.

The work required included:
  • Complete renovation of the three canal facing windows whilst maintaining the historical aspect of the house
  • Replacement of the front and rear doors whilst retaining the historical aspect
  • Installing new cost effective heating
  • Replacement of the outdated kitchen
  • Complete renovation of the bathroom - the floor was unsafe amongst other issues
My accounts show that I paid the following amounts in VAT and other taxes
  • Windows (VAT) £640
  • Recarpeting (VAT) £400
  • Bringing the house back to a habitable standard (VAT) £8,300
  • Additional Council Tax for the period not occupied by me (due to building works) 26-April-13 to 27-June-13 £100
This is my only house, it is not a buy-to-let or any other form of investment, I am not a developer and it is my intention to remain in the house for the foreseeable future. I do not intend to sell the house or make it available for rent.

At a time when it is well known that the country is short of housing I am uncomfortable that there is no process to claim some kind of rebate against the swingeing VAT (20%) imposed on all aspects of bringing this house back to a habitable status.  I wouldn't expect a zero rating for work such as this (although new houses are zero rated) as I have undoubtedly improved the accommodation but I believe there should be avenues to claim a lower rating of VAT for the principle of bringing a house back into the usable stock of the country.  And as for the refusal of my local Council to grant the 25% single occupancy discount from day one of my ownership - I am lost for words on the way this is allowed.

I have paid Stamp Duty on the purchase but have also been taxed, unfairly in my opinion, on work required to bring the house back to a habitable standard to the extent of approximately £10,000 for which the Government has done nothing other than to add it to their coffers.

I would appreciate your views as to why I have been taxed, again in my opinion, so harshly when listed buildings and new builds are seemingly able to obtain substantial relief.

If you are in the Stoke Bruerne area I would welcome the opportunity to meet you.

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