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HMRC internal manual

VAT Construction

Zero-rating the construction of buildings: is a building being constructed: relevant charitable purpose annexes

Note 16(c) holds that the construction of an annexe to an existing building is ‘the construction of a building’ if the works fall within Note 17.

Before considering whether Note 17 is met, you must first be satisfied that the structure being constructed is an annexe. The decision in Colchester Sixth Form College (VTD 16252) confirms Note 17 does not determine this:

We reject the argument that Note 17 defines annexe. There is no definition of annexe; Note 17 lays down the requirements that an annexe has to fulfil if the relevant supplies of construction works are to be zero rated.

Similarly, the decision in The Roman Catholic Diocese of Shrewsbury (VTD 17900) says:

It is clear from the wording and juxtaposition of Notes 16 and 17 that one must first consider whether a structure is properly to be regarded as an annexe before turning to Note 17 to see whether it additionally satisfies the requirements set out in that Note; Note 17 is not to be taken as the statement of the criteria by which it is determined whether a structure does or does not amount to an annexe.

The structure needs to be considered as a whole and the conditions in Note 17 applied to the structure as a whole. This has been confirmed in Thomas Rotherham College (VTD 17841) in which the degree of integration differed on each of the three floors and it was decided that, as a whole, the structure was not an annexe.

VCONST02350 provides further details of the cases referred to on this page and other ‘annexe’ cases.