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HMRC internal manual

VAT Construction

Zero-rating major interest grants in substantially reconstructed ‘protected buildings’: what ‘substantially reconstructed’ means: stage 2(a) - the ‘shell’ test

To meet this test, the building, as it stood before the reconstruction, simply has to be ‘gutted’. This means the developer:

  • must not retain any of the internal fabric of the building as it was before the reconstruction began (such as floors, staircases, and so on)


  • can retain external features of architectural or historic interest (for example the roof, a dome, colonnades, a porch, and so on).

This test is not dependent upon the type of work that takes place. If it is not met, the alternative 60 per cent test can also be considered.