VAT - HMRC clarify treatment of the building & supply of ‘extra care’ accommodation
Developers sometimes build what is known as “extra care accommodation”. This consists of self-contained flats, houses, bungalows or maisonettes sold or let with the option for the occupants to purchase varying degrees of care to suit their needs, as and when they arise. Some local authorities have classified extra care accommodation for planning purposes as a “residential institution”, rather than as “dwellings”. HMRC have confirmed that for VAT purposes such extra care accommodation qualifies as a dwelling, unless it is “accommodation where the occupant needs care or supervision of a type typically provided by an institution”. In other words, the planning classification is not determinative, whereas the characteristics of the accommodation are.
The distinction is important for constructors and developers, as conditions and requirements for the zero & reduced rating of institutions are ordinarily significantly greater than those required for a dwelling.
23 January 2012
