Zero-rating major interest grants in buildings: ‘person constructing a building’: buildings that are sold for a different purpose than that for which they were constructed
Where the building being sold was constructed as a dwelling, its first major interest grant is zero-rated provided the building still fulfils the conditions of Note 2 (VCONST14100).
The grant of a building constructed as a qualifying building but sold as a non-qualifying building, such as a dormitory block for students subsequently sold as a hotel, is not zero-rated. This view is supported in:
- University of Bath (VTD 14235)
- University Court of the University of St Andrews (VTD 15243).
The grant of a building constructed as a non-qualifying building but sold as a qualifying building is not zero-rated under the rules in this section. Whilst the grantor has ‘person constructing’ status, the grantor is not a ‘person constructing a building intended for ‘a qualifying use’.
However, it may be possible to zero-rate the grant as the first major interest grant of a residential building converted from a non-residential building (VCONST04000).