VAT refunds experience delays

Self-builders who’ve built a new home in NI have been waiting nearly a year to get their VAT refund, even though applications are meant to be processed within six weeks.

One self-builder in NI, who appointed a contractor for his new build project, submitted his application in February 2022. Eight months later, in October 2022, he received the letter confirming the balance would be paid into his account “up to 10 weeks later”.

Self-builders in NI who build a new home are entitled to recover the VAT they paid on materials upon completion of their build. The application must be made to the central tax authority, the HMRC, after signoff from building control. You need to apply in writing within three months of completion of the build.

“We understand the impact waiting for these repayments has on customers,” a spokesperson for the HMRC told Selfbuild. “That’s why we’ve put in extra resource and speeded up our processes. As a result, we should be working new claims within our six-week target in March 2023.”

“The worst I came across was a claim that was submitted in the spring of 2021,” Dave Brown, VAT expert, told Selfbuild. “The HMRC wrote to the client with questions within a couple of months. The client replied and didn’t hear anything else for a year. They eventually got the money in October 2022.” before 2021 can apply, as determined by the date of the meter installation. the grid taking place just last year. This is expected to increase further as prices come down and solar becomes more mainstream,” added Minister Ryan.

Combined with the Sustainable Energy Authority of Ireland (SEAI) grant amounts of up to €2,400, the total average home solar installation will fall to about €5,600.

The average installation on Irish homes is 4.5kW, or about 14 PV panels.

This is good news for self-builders as new builds do not qualify for the SEAI grants but the zero VAT rate will apply across all installations.

The building regulations for new builds require one renewable component, which can be solar.

The VAT change will reduce the payback period by just under a year, from seven years to 6.2 years.

The tax rebate comes on the back of an amendments to Annex III of the EU VAT Directive which allows member states to apply a zero rate within category 10c which is for the ‘Supply and installation of solar panels on and adjacent to public and other buildings used for activities in the public interest, housing and private dwellings’.

The Department of Finance has estimated that the measure will cost €19 million annually. The government also plans to put solar panels on all schools by 2025, starting this summer.

“One major problem was that a lot of HMRC staff were moved sideways to deal with Covid, furlough, etc., so when the staff were replaced, the new ones may not have had the same knowledge and experience.”

“It’s not all about the Covid hangover, though, as it has continued beyond. This morning [in February 2022] I received a letter from HMRC about a claim I submitted in October 2022, stating they’ve received it and will be dealing with it in the next six weeks. So, if they’re lucky the client will get it paid within six months from when the claim was made.”