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HMRC internal manual

VAT Construction

DIY builders and converters VAT Refund Scheme - eligibility of claims: condition 6: is the claim for eligible goods and/or services?



If a building is being constructed, claimants are only entitled to a refund of VAT on eligible goods.

For residential conversions, claimants are entitled to a refund of VAT on both eligible goods and services.


The law provides entitlement to a refund of VAT on goods.

However, a refund can’t be made for all goods. Entitlement is restricted by law to those goods that are building materials which, in the course of the works, are incorporated in the building in question or its site.

Thus, to be eligible for a refund the goods must be:

  • building materials (for the purposes of the Refund Scheme ‘building materials’ has the same meaning as for the zero-rating provisions) (VCONST13000)


  • used in the course of the work (therefore goods used in the course of work after completion are excluded)


  • incorporated in the building or its site (therefore tools and consumables, such as cleaning materials, are excluded).

Goods purchased in other Member States

There is legal provision under S. 35(3) for a Refund Scheme claim to include VAT incurred on eligible goods purchased in other Member States.

The refund can only be made in sterling and an appropriate exchange rate should be used. For tax inclusive amounts the amount of VAT is determined by using the VAT fraction applicable to the rate of VAT charged by that Member State.

Goods purchased from outside the EC

Goods purchased from outside the EC will be charged VAT on importation. This is the amount that can be refunded. If, when buying the goods, the claimant has also been charged a local tax that is equivalent to VAT, that amount cannot be refunded.

Conversion services

Entitlement to a refund of VAT on services is limited to the work of carrying out a residential conversion.

A refund can’t be made for the following:

  • services that aren’t the work of conversion, such as hire charges
  • charges by people acting as an architect, surveyor, or consultant, or in a supervisory capacity.

Delivery charges

The VAT incurred on delivery charges separately itemised on main invoices for eligible goods are part of the value of the goods for the purposes of the Scheme and can be refunded.

Separate invoices for transport or delivery aren’t eligible for refund.