Buildings and construction ― definition of dwelling

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

  • Buildings and construction ― definition of dwelling
  • When is a building designed as a dwelling?
  • What is self-contained living accommodation?
  • What is direct internal access?
  • When is separate use or disposal of a dwelling prohibited?
  • When is construction / conversion carried out in accordance with statutory planning consent?
  • Can a building be a dwelling and used for relevant residential purposes?
  • Practical points ― buildings designed as dwellings

This guidance note looks at when a building is ‘designed as a dwelling or a number of dwellings’ for VAT purposes.

Detailed discussion of the legislation and case law on dwellings can be found in De Voil Indirect Tax Service V4.232BA.

When is a building designed as a dwelling?

There are four key conditions that need to be met for a building to be considered to be ‘designed as a dwelling’ for VAT purposes:

  • it must have self-contained living accommodation
  • there must be no direct internal access between other dwellings or parts of a other dwellings
  • there must be no covenants, statutory planning consent or similar provisions which prevent the separate use or disposal of the dwelling
  • the construction / conversion must be carried out in accordance with statutory planning consent

VATA 1994, Sch 8, Group 5, Note 2

These conditions are explored further in this guidance note.

What is self-contained living accommodation?

For a building to have self-contained living accommodation, it must have the basic elements of living so HMRC expects to see the following at a minimum:

  • kitchen
  • bathroom
  • sleeping area
  • livi

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