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HMRC internal manual

VAT Construction

Dwellings - an explanation of terms: what ‘designed as a dwelling or number of dwellings’ means: Note 2(d) - statutory planning consent

The test is whether the dwelling that meets conditions (a) to (c) has been granted planning permission and whether it has been constructed or converted in accordance with such consent.  (One form of statutory planning consent is Permitted Development Rights – for further information see Revenue and Customs Brief 09/2016.

This will be a matter of fact in each case. However, variations to the planning consent, resulting in a change in appearance, or to the composition or distribution of the accommodation, should be accepted. More radical departures resulting, for example, in a much larger dwelling being constructed, should be rejected as failing to satisfy the condition, unless there is evidence that the planning authorities have decided not to pursue the matter.

In Allan Ivor Davison (VTD 17130), planning permission had been obtained for the construction of a double garage. Above the garage, the appellant built another storey, which he furnished as a kitchen, living room and bedroom. The tribunal held that although the building was self-contained living accommodation, the work didn’t qualify for zero-rating because it hadn’t been carried out in accordance with statutory planning consent.

A similar conclusion was reached in Keith Lamming (TC 00022). In that case, the appellant constructed an independent dwelling rather than the annex with connecting doorway, for which he had received planning permission.