Residential conversions and VAT

Update – July 2014

HMRC have now confirmed to the NFU that VAT may still be reclaimed for conversions of non-residential farm (agricultural) buildings to dwellings under the new DCLG permitted development rules. They have stated:

“It is our view that any relevant permitted developments under the Permitted Developments Order satisfy Note 2(d) in respect of the requirement that statutory planning consent has been granted in relation to that dwelling. The inclusion of certain types of development in such a Permitted Development Order equates to a removal of the need to apply for planning permission not that a developer does not require planning permission.”


The issue

The National Farmers Union had been seeking clarification from HM Revenue and Customs on the use of the DIY self-build scheme for conversions of farm buildings to residential use within new permitted development rights.

tax time_275_183The DIY self-build scheme is used to recover VAT on newly constructed residences or conversions of commercial buildings to residential use. However one of the conditions for the use of the scheme is that the taxpayer has obtained planning consent. The application form requires the taxpayer to submit a copy of the planning permission with their claim.

The NFU believed that conversions carried out under new permitted development rights will be carried out within the general planning consent there will clearly be no formal evidence that planning permission has been granted. HM Revenue and Customs initiallysuggested that this may present a problem with the use of the DIY self-build scheme and are currently considering the issue further.

People considering converting a farm building to residential use under the new permitted development rights should take professional advice on the tax implications at an early stage.


  • Posted by: Bob MiltonPosted on: 01/09/2014 12:42:33

    Comment: You really need to give a bit more detail covering the grazing of cattle and other animals eg ponies where there is an exisiting right of public access for recreational purooses such as under commons to which s193 of the law of property act applies and to explain the derogation for commoners under the Animals Act. I am happy to discuss this matter if your legal team want but the advice at the moment falls seriously short of what is legal with respect to commons and conservation grazing by Wild life trusts and others.
  • Posted by: marion larriganPosted on: 15/12/2016 13:14:36

    Comment: We are converting an agricultural barn for residential use re the permitted development route, do we qualify for zero rated v a t
  • Posted by: marion larriganPosted on: 20/12/2016 09:22:20

    Comment: do I have to pay vat on a conversion of an agricultural barn to a dwelling if permission is granted by permitted development , it was previously used to house Bulls and pigs