VAT on dwellings formed from more than one building

In its Revenue & Customs Brief 13/2016 HMRC has advised that it will now accept, with effect from 23 August 2016, where dwellings are formed from either the construction of new buildings or from the conversion of non-residential buildings VAT law can be interpreted as allowing the construction of single dwellings formed from more than one building to be eligible for zero-rating (where certain conditions are met). Work to convert such buildings into a single dwelling will also qualify for the reduced rate of VAT.

Those who have constructed or converted eligible buildings into new dwellings, consisting of more than one building that hasn’t previously been treated as zero-rated (for example, works of construction and eligible conversion services) may submit claims for overpaid VAT with retrospective effect up to 4 years from the date of the publication of this brief.

The Commissioners may refuse claims where the claimant would be ‘unjustly enriched’ as a consequence.