HMRC should refund VAT on my self-build house, where is my money?  

Myself and my wife have been building a new house to live in for the past two years and finally moved in earlier this year.

We were hoping to benefit from a government DIY scheme where HMRC refunds VAT paid by DIY builders on things like building services and materials.

We paid for this out of pocket during construction and it came to around £36,000, so understandably we were keen to reclaim it as soon as possible and sent all evidence to HMRC at the end of April.

According to HMRC, we should have been notified within six weeks that our claim was being processed, but that never happened.

We recently received a ‘reclaim ID’ for our case, but more than six months after the application we are no closer to finding out if our claim will be approved and how long it may take for the refund to be paid.

I have been calling HMRC since June and every time I am told that the relevant department is very busy, Covid has delayed them and they are no longer able to provide information.

This is £36,000 of my money and in these trying times we need every penny we can get. It just seems to me that they’re holding on to the money for as long as they can and I’m sure if the boot was on the other side and I owed £36,000 for six months I’d be getting threatening letters every week.

I’m not sure if you can help, but I’m just so tired of being brushed off with nonsense excuses by government departments. JR, Essex

Helen Crane, This is Money, replies: I’m sorry to hear this. HMRC famously told us that paying your tax doesn’t have to be onerous, but reclaiming it has certainly been for you.

The UK has been suffering from a serious lack of new homes for years, and one of the many ways the government has tried to solve this is by giving enterprising types like you who decide to build one some money from their tax bill.

Self-builders are eligible for the refund if they build a new home, convert a non-residential building into a home or convert a residential building that has been uninhabited for at least 10 years before the work commences.

They must send invoices, building plans and other evidence to HMRC within three months of the move, and according to the government’s website, ‘HMRC will write to you when you can expect your VAT refund if your claim is successful. They usually write to you within 6 weeks.’

It should be a win-win situation, but the system falls apart when homebuilders like you who are planning to go find themselves unable to recover the money for months. Building a house is expensive, and most will be thousands out of pocket.

When you called HMRC you got a laundry list of excuses. You were informed that the Newcastle-based DIY Building team handling these claims were very busy, with a lack of staff available to process your documents and delays continued to be caused by the pandemic.

You are correct in saying that if the situation were reversed and someone was more than six months late in paying their tax bill, HMRC would probably look a bit livelier.

I contacted HMRC to ask what the robbery was. I am pleased to say that you received £21,000 in your account within a few days.

It’s not the full £36,000 you’ve claimed, but hopefully it will help plug the black hole in your bank account.

An HMRC spokesperson said: ‘We are sorry [the claimant] has waited so long. We have reviewed his claim and a refund will be with him within five business days.”

The department has not returned in time for publication to tell me the reason for the delay, or why you have not received the full amount you claimed, but I will update readers when I hear back.

‘Trainline won’t refund my canceled trip because I could have gone “partly” – but I’m 78 and can’t make changes’

Also this week, reader Muriel contacted me to tell me about her train pain she experienced trying to get from her home in Berkshire to visit her daughter in Cornwall.

Those of us who travel regularly on public transport have been plagued with delays and disruptions this year, and getting your money back when this happens can be quite challenging.

After months of complaining, Muriel and her daughter feared they were at the end of the line, but I decided to look into their case.

Muriel explained: ‘My daughter booked me a return train from Reading to St Austell, Cornwall, in June so that I could visit her. She booked it on the ticket website Train line and it cost £58.25.

Travel issues: Muriel had booked a train to visit her daughter but had to change it at the last minute and had to find an alternative with a seat booked (photo posed by model)

‘The day before we received an email that the outward journey we booked would no longer stop in St Austell due to a strike, but that we could change the booking free of charge.

‘I’m 78 and need to take a direct train and have a seat booked. I also had to be picked up from St Austell so couldn’t go to another station.

‘But when my daughter tried to rebook the ticket for free, as stated in the e-mail, it didn’t work. Running out of time to book the journey, she changed the outward journey to a train later that day and paid an additional £57.25.

“We have since tried to recover this money from Trainline, but have been refused. My daughter sent endless emails, but the company came up with several excuses.

It said I couldn’t get a refund because the train was running “partially” and also that the handling fee wouldn’t cover the cost of the ticket. How can this be right?’

Helen replies: Travel problems can be traumatic for people of any age, but it is especially difficult for older people who may not be able to change their route or take a different mode of transportation.

Changing plans at the last minute can also mean losing their booked seat, leading them to a long and uncomfortable journey.

I contacted Trainline, a third-party site that sells tickets for multiple train operators, to find out their policies regarding refunds and trip changes.

I’m happy to say that a refund for the £57.25 second ticket is now on its way.

A spokesperson said: ‘We are sorry for the confusion caused and a refund for the replacement ticket is on its way. In the event of a disruption, including those caused by strikes, we will contact our customers to provide information on what to do next.

If a customer’s train is cancelled, their existing ticket becomes valid on the operator’s next available train. If a customer would like a seat reservation for this service, this can be arranged free of charge by contacting our customer service team.

“If a customer prefers to take the same journey at a different time or date, they can also change their ticket free of charge or receive a full refund.”

Strikethrough: Trainline says customers should be able to travel on the next available service if their trip is canceled due to a strike

Muriel could have traveled on the next train with her ticket, but with less than a day’s notice and a lack of clarity on how to change the booking on the website or secure a new seat reservation, I can understand why her daughter had to choose another booked to make sure she could travel safely.

In any case, it shouldn’t have tried to scare off an elderly customer by saying she could have traveled to another destination by train, or that the handling fee wouldn’t cover the cost of the ticket.

I’m glad Trainline did the right thing by returning the money, and I hope Muriel’s future trips to Cornwall aren’t derailed by cancellations.