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HMRC internal manual

VAT Construction

From
HM Revenue & Customs
Updated
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Zero-rating the construction of buildings: is a building being constructed: several buildings forming relevant residential purpose units

The construction of a building intended for use solely for a relevant residential purpose is zero-rated.

There is also a special rule that treats each building in a complex of buildings as intended for use for relevant residential purpose even though it is not intended to be so used. This treatment is subject to the following conditions being satisfied:

  • the buildings must be intended for use together as a unit solely for a relevant residential purpose
  • they must be constructed on the same site, that is have a fairly close geographical relationship
  • they must be constructed at the same time, that is either together or immediately following each other.

The relevant law is the Value Added Tax Act 1994, Schedule 8, Group 5, Note 5.

For example, if a residential care home is constructed as a series of buildings and one of those buildings is an administration block, that block will also qualify for zero-rating even though it is not itself intended for use solely for a relevant residential purpose.