HMRC internal manual

VAT Construction

VCONST07420 - Reduced-rating the renovation or alteration of empty residential premises: have the premises been lived in recently: applying the first ‘empty home condition’

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The test is whether the premises have been continuously ‘empty’ in the two years immediately before the supplier starts his work. If this test is met, all of the supplier’s qualifying work will be reduced rated.

The test is not whether at some point prior to the commencement of works there was a continuous period of two years when the building had not been lived in. If the premises have been lived in during the recent past, the first empty condition can’t apply. However, the second empty home condition may apply (VCONST07430).

Each supplier must look at his work independently from any other person working on the premises. Consequently, if the premises start to be lived in whilst the works are being carried out, any sub-contractors who start their work after that point must standard-rate their work even though the main contractor is able to reduced-rate theirs.

The reason why the sub-contractor is standard-rated is because effectively the nature of the supply of services has shifted from the first empty home condition to the second empty home condition. The supply may fall within either of the empty home conditions but not both.

Similarly, if a contractor is engaged on several contracts at the same premises, and the premises become occupied between contracts, he must standard rate those contracts that start after the date the premises start to be lived in.

Note: The contractor may be able to use the second ‘empty home condition’ (VCONST07430).

The ‘empty home conditions’ are not based on when the premises became empty, but when the premises were last lived in. Notice 708 Buildings and construction explains the type of evidence that can be provided to demonstrate this.

Consequently, premises that have been used, without adaptation, for storage or a purpose other than living accommodation for two years will be treated as ‘empty’ for the purposes of the reduced-rate.