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HMRC internal manual

VAT Construction

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HM Revenue & Customs
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Zero-rating the construction of buildings: is a building being constructed: qualifying annexe

If you are satisfied that the structure is an annexe you can then go on and consider if it is a qualifying or part qualifying annexe. To be so it must meet all of the following conditions:

  • the annexe (or part of the annexe) is intended for use solely for a relevant charitable purpose
  • the annexe is capable of functioning independently from the existing building
  • the main access to the annexe is not through the existing building or the converse.

Notice 708 Buildings and construction, at Section 3 gives guidance on the application of the second condition.

The third condition means that the annexe and the existing building each as its own main access. As the term implies, the main access is the point or points that are routinely used by those entering the annexe.

What amounts to a ‘main access’ was reviewed in Abercych Village Association (VTD 20746). The Tribunal said in the course of its analysis that:

It seems to us that, whilst section 6 Interpretation Act 1978 might be prayed in aid to permit ‘the main access’ to mean ‘the main accesses’ that is to say all of the main accesses, it cannot be used to interpret ‘main access’ as ‘the main access or one of the main accesses’. Thus in our view the limitation in sub-section (b) applies only if the main access or all the main means of access to one building are through the other, and will not apply if there are two or more main accesses, one of which is through one building and the other through the other building.

We disagree. If there are two ways of routinely accessing the annexe and one is through the existing building, the access test is not met.

The provision that prescribes the above conditions is the Value Added Tax Act 1994, Schedule 8, Group 5, Note 17.