Sale or grant of a long lease ― zero-rating for newly constructed buildings

By Tolley
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The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Sale or grant of a long lease ― zero-rating for newly constructed buildings
  • When can the sale / grant of a lease in newly constructed buildings be zero-rated?
  • What is an eligible property in this context?
  • Is an eligible property being constructed?
  • Is there a grant of a ‘major interest’?
  • Is the grant the first grant of a major interest?
  • Does the person making the grant have ‘person constructing status’?
  • When is a building a holiday home?
  • What is the special rule for tenancies?
  • When is a certificate required in order to zero-rate the sale / grant of a lease?
  • What happens if only part of a building qualifies for zero-rating?
  • How do the rules apply to land, garages and partly constructed buildings?
  • Granting a major interest to a connected person
  • Practical points ― selling / granting leases in newly constructed buildings

This guidance note sets out when zero rating can apply to the sale or grant of along lease in newly constructed buildings For an overview of the liability of supplies of land more broadly see the Overview of VAT and property issues guidance note Detailed commentary on the legislation and case law can be found in De Voil Indirect Tax Service V4 233 When can the sale grant of alease in newly constructed buildings be zero rated Zero rating can apply where the following conditions are met the sale is of an eligible property the eligible property is being constructed there is agrant of amajor interest the grant is the first grant of amajor interest the person making the grant has person constructing status the building is not aholiday home if the grant is atenancy the payment is apremium or the first payment of rent if appropriate azero rating certificate has been issued to the supplier VCONST03100 VATA 1994 Sch 8 Group 5 These conditions are considered further in this guidance note What is an eligible property in this context The types of property covered by this zero rating are abuilding designed as adwelling or anumber of dwellings abuilding intended for use solely for arelevant residential purpose RRP abuilding intended for use solely for arelevant charitable purpose RCP VATA 1994 Sch 8 Group 5 Item 1 What is abuilding designed as adwelling or anumber of dwellings For commentary on the meaning of dwelling in this context see the Buildings and construction definition of dwelling guidance note VATA 1994 Sch 8 Group 5 Note 2 When is abuilding intended for use solely for an RRP For commentary on the meaning of relevant residential purpose in this context see the Buildings and construction definition of relevant residential purpose RRP guidance note For the meaning of solely see

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