V16.1046 Construction services and zero-rated relief
Information Sheet 7/17, December 2017
1 About this information sheet
This VAT Information Sheet explains HM Revenue and Customs (HMRC) policy on how VAT is applied to the construction of buildings that keep or make use of, parts of a building that previously stood on, or was adjacent to, the site where the works of construction are taking place.
It explains the circumstances in which the services of construction may be zero-rated when a building is either—
• designed as a dwelling (or a number of dwellings)
• intended for use solely for a relevant residential or a relevant charitable purpose.
This policy will affect the liability of the first grant of a major interest by the person who is constructing the building. In addition it sets out the evidence needed to confirm that a development qualifies for zero-rated relief.
The publication of this information sheet follows three Upper Tribunal (UT) judgments, Astral Construction Limited (“Astral”) (2015) UKUT 21, Boxmoor Construction Limited (“Boxmoor”) (2016) UKUT 91 and J3 Building Solutions Limited (“J3BS”) (2017) UKUT 253.
1.1 Who should read this
Owners and developers of buildings that are being constructed on sites previously occupied by buildings. It'll affect those making the first grant of a major interest in the building or who will be in receipt of construction services, or will be submitting a VAT refund claim under the DIY House Builder Scheme.
VAT relief at the zero-rate, is available for the construction of buildings that are either designed as dwellings or are