Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

VAT Construction

From
HM Revenue & Customs
Updated
, see all updates

Zero-rating major interest grants in buildings: holiday homes: applying Note 13 to residence restrictions

Before applying Note 13 you will need to identify any residence restrictions that may exist. These will normally be identifiable from the conditions of sale or planning permission.

The Tribunal decision in Loch Tay Highland Lodges Limited (VTD 18785) has confirmed that for a grant to be zero-rated both of the following tests must be met. If either test is not met then the grant is not zero-rated:

  • the recipient of the grant (the grantee) must be able to use the building, or part of the building, as a residence for the whole of the year (VCONST03430)
  • the recipient of the grant (the grantee) must be able to use the building or part of the building as their principal private residence (VCONST03440).