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HMRC internal manual

VAT Construction

HM Revenue & Customs
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Dwellings - an explanation of terms: what ‘designed to remain as or become a dwelling or number of dwellings’ means

In order for approved alterations and/or the first grant of a major interest in a substantially reconstructed protected building to qualify for zero-rating, the finished building must be ‘designed to remain as or become a dwelling or a number of dwellings’.

The statutory definition

The term ‘designed to remain as or become a dwelling or number of dwellings’ is defined in the Value Added Tax Act 1994, Schedule 8, Group 6, Note 2.

The main distinction between this Note and Schedule 8, Group 5, Note 2 (VCONST14100) is the absence of the requirement for statutory consent to have been given for the dwelling. This is because, in the case of a listed building, it is likely to have been constructed before statutory planning consent was required for new properties. The point can be made with even greater force for scheduled monuments.

In all other respects, the conditions are applied in the same way.

A garage is also treated as part of a dwelling if constructed, not only at the same time that the dwelling was constructed, but also, if the dwelling has been substantially reconstructed, at the same time as that reconstruction (VCONST08240).