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HMRC internal manual

VAT Construction

‘Relevant residential purpose’ - interpretation of terms: exceptions to use for a relevant residential purpose: prison or similar institution

A building isn’t used for a relevant residential purpose when it is used as a prison or similar institution.

Prisons are intended to accommodate those convicted of a criminal offence, or those charged with a criminal offence who have been remanded in custody. Their main purpose is to punish and rehabilitate.

Where the intended regime for a resident is neither punitive or rehabilitatory in a penal sense, it isn’t a prison or similar institution.

Note: Secure mental health establishments receive people who are detained under the mental health legislation that have been convicted of a criminal offence. Such establishments aren’t intended for use as a prison or similar institution, and aren’t to be so classified. The purpose in detaining the person isn’t to punish, but to treat or care for the individual, and is either a hospital or qualifying residential unit.