In a case which powerfully underlined the high standard of proof required to show entitlement to tax concessions, a builder has failed to convince a tribunal that his VAT liability in respect of a renovation project should be capped at 5% on the basis that the residential property had been empty for two years.
The builder had been engaged on the three-month job by the property’s new owners who did not move in until after the work was complete. He argued that the property had been vacant for two years before he started work and that the VAT concession contained within section 29A of the VAT Act 1994 was thus available to him.
After Her Majesty’s Revenue and Customs (HMRC) disputed his claim, the builder challenged the decision before the First-Tier Tribunal. Amongst other things, he presented evidence in the form of council tax bills which, he argued, indicated that the property had been empty for the requisite period.
He also pointed out that there was no furniture in the house when he began work; the curtains in the windows were filthy; there was damp in the kitchen and that tree seedlings in the garden had grown to five or six feet in height, indicating that it had not been tended for several years.
However, in dismissing the builder’s challenge, the Tribunal found that the run-down state of the property, although suggesting that it may have stood empty for some time, was also consistent with the ill-health or incapacity of a previous occupant. The builder had also failed in his attempts to obtain a certificate from the relevant local authority confirming that the property had been vacant for two years.
Noting that it was for the taxpayer to prove his case, the Tribunal was unable to find on the evidence before it that the property had been empty for two years prior to the commencement of work. Despite the ‘valiant efforts’ of the builder and his lawyers, the Tribunal found that the evidence presented was simply ‘not sufficient’ to establish entitlement to the relevant VAT concession.