V3.248 Change of use of relevant charitable or residential building
A person intending to use a building solely for a relevant residential purpose1 or a relevant charitable purpose2 receives a supply zero-rated under VATA 1994, Sch 8, Group 5 (construction of buildings) if, having been given the required certificate3:
(1) the person constructing the building grants the fee simple or a lease for a term exceeding 21 years to him4, or
(2) a building contractor constructs the building on land in which the person has a freehold, lease or licence5.
The supply made in either situation is referred to as a 'relevant zero-rated supply'6.
A charge to tax arises if the building ceases to be used for a relevant residential or charitable purpose in the circumstances set out below. It should be noted that this charge is confined to recipients of a relevant zero-rated supply. No charge to tax arises if the supply was zero-rated under VATA 1994, Sch 8, Group 6 (protected buildings)7 or if a refund of tax was received under VATA 1994, s 35 (DIY builders scheme)8.
Prior to 1 March 2011, the charge to tax arose in two forms:
– where the change of use took the form of the grant of an interest in, right over, or licence to occupy the building in question, the grant was standard-rated (see V4.113A)
– where the change of use took the form of a variation in the extent to which the building was used for a relevant residential or relevant charitable
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