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HMRC internal manual

VAT Land and Property

From
HM Revenue & Customs
Updated
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New, and partly completed, buildings and civil engineering works (Item 1(a)): which types of supply will fall outside the exemption?

It is only the sale of the freehold - grant of fee simple - of new, or partly completed, buildings and civil engineering works which is excluded from the exemption by Item 1(a), and is consequently standard rated (except in circumstances where the criteria for zero rating are met - Notice 708 Buildings and construction and VCONST).

Leasings and lettings of these types of property remain exempt, with an option to tax.

Notice 742 Land and property describes what is meant by ‘new’ and ‘completed’ and explains that where the building is fully occupied before the certificate of practical completion is issued, the date of completion will be the date on which the building is first fully occupied.

The term ‘fully occupied’ is not defined in the law and should therefore take its normal every day meaning. You should consider both physical and constructive occupation of a building. Evidence of physical occupation could be installation of furniture and equipment in the building, whereas evidence of constructive occupation could be an agreement giving a legal entitlement to occupy the building. The extent to which a building is fully occupied will need to be considered on the facts of individual cases.