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HMRC internal manual

VAT Construction

Zero-rating major interest grants after a non-residential conversion: basic conditions for zero-rating major interest grants after a non-residential conversion

The basic conditions for zero-rating the sale or long lease of a building after it has been subject to a non-residential conversion are set out in Notice 708 Buildings and construction. The legal basis for the conditions and where further guidance on their interpretation can be found is as follows:

Condition Relevant law (all references are to VATA 1994, Schedule 8, Group 5 unless otherwise stated) Guidance
1 - A grant of a major interest in the building is made Item 1(b).  
VATA 1994, Section 96 (definition of ‘major interest’). VCONST04200      
  2 - For tenancies, the payment is a premium or first payment of rent Note 14. VCONST04300  
  3 - The building is the subject of a ‘non-residential conversion’ Notes 7 to 9. VCONST04400  
  4 - The building is not a holiday home Note 13. VCONST04600  
  5 - The grantor has ‘person converting status’ Item 1(b). VCONST04700  
  6 - The grant is the first major interest grant in the building Item 1(b) VCONST04800  
  7 - Where necessary, a valid certificate is held Note 12. VCONST18000