Contractor not an issue for self-builds under Help to Buy

I’m looking to apply for the Help to Buy scheme and I came across an article you had written. You stated that there was no need to worry about the contractor not being on the list, as they are not part of the process. Is this still the case?

Ms RN, email

Your letter alarmed me slightly so I went back and checked the piece to which you are referring.

It’s not that black and white, nor did I say it was. The list of registered contractors is central to any claim you make under Help-to-Buy UNLESS you are applying under the self-build provisions of the scheme.

It is one of the more interesting anomalies in the Help-to-Buy tax-relief scheme introduced last year but you do not have to worry about the contractor if you are applying under the self-build provisions of the programme. At least as far as the Revenue is concerned.

The reason it is interesting, of course, is that a big reason for dragging contractors into the scheme on a registered list was to ensure they were tax-compliant.

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If you are buying a home from a developer, you must ensure the contractor appears on the approved list: otherwise, you will lose out on up to €20,000 of income tax relief even if you qualify under all other provisions of the scheme.

However, if you are self-building, there is no obligation to ensure any contractor is on the list – notwithstanding the fact that most self-builds will be constructed by a contractor rather than by the actual homeowner. And, by their nature, most of these builders will be smaller operators who are, if anything, likely to have more issues with tax compliance.

Tax compliance

On the surface, certainly, it seems strange that an arrangement carefully designed to ensure tax compliance leaves this cohort outside the net. But that’s as it is.

The rules for a self-build applicant making a claim under the scheme are outlined in detail in subsections 14 and 15, of section 9 of the Finance Act 2016.

They require you, the applicant, to give the Revenue your name and PPS number along with the address of the property concerned and its purchase value. They will also want details of your lender, confirmation that a valid qualifying loan has been entered into, the amount of the loan and details of the loan account to facilitate payment of the income tax rebate on approval of your claim.

Finally, you’ll need to confirm that it is your first property and that it will be occupied by you on completion.

Thereafter, your solicitor (under subsection 15) takes over and they have to confirm your name and the address of the property (again). They will also have to confirm the value of the property and provide evidence of both the qualifying loan and the drawdown of its first tranche.

Self-build regime

At no point is there reference to the builder, unlike the process for those applying other than under the self-build regime.

However, for everyone else – the majority – the relevant subsections for making a claim are 12 and 13. And among the information required under subsection 12 is evidence of the contract you have entered into with a qualifying contractor, and details of any deposit you have paid a contractor or due to them.

Subsection 13 requires the contractor to confirm their name, their tax reference number and VAT registration number, along with details on you, the claimant, and the property. So they are central to the scheme for most people.

Finally, of course, the contractor needs to give Revenue their bank details because the Help to Buy payment is made to the contractor for applications made after January 1st last year – apart, of course, from self-builds.

Please send your queries to Dominic Coyle, Q&A, The Irish Times, 24-28 Tara Street, Dublin 2, or by email to dcoyle@irishtimes.com. This column is a reader service and is not intended to replace professional advice