We have recently learnt about Section 8 of HMRC's VAT Notice 708: buildings and construction. In a nutshell, VAT can be reduced-rated if the renovation is a dwelling that has not been lived in for at least two years before the work starts. That means 5% liability rather than the standard rate. The house had been empty for at least five years when we bought it a year ago.
Sadly HMRC don't do things in nutshells. The Section goes on to describe what 'qualifies', what is 'relevant', and what 'conditions' have to be met. So the initial excitment of possibly recouping some of our massive overspend rapidly withered as we realised, for instance, building materials didn't qualify as we had procured them, not the VAT registered builder.
When will gov.uk realise that part of the current housing crisis could be eased at a stroke by encouraging renovation of the thousands of empty houses through a properly reduced tax liability? It shouldn't be that complicated.
Bizarrely, in addition, we were stung with a 50% council tax premium as we were renovating a property that had been empty for more than two years!
Russel and Anna Hayden