Buildings and construction ― definition of relevant residential purpose (RRP)

Produced by Tolley
Buildings and construction ― definition of relevant residential purpose (RRP)

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

  • Buildings and construction ― definition of relevant residential purpose (RRP)
  • What is an RRP?
  • What is a home or institution?
  • What is a home?
  • What is an institution?
  • What factors should I consider when looking at homes and institutions?
  • How do the rules apply to assisted living accommodation?
  • What is residential accommodation?
  • What is a student?
  • What is a hospital?
  • More...

This guidance note looks at the meaning of the term ‘relevant residential purpose’.

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

What is an RRP?

An RRP means use as any of the following:

  1. a home or institution providing residential accommodation for children

  2. a home or institution that provides residential accommodation with personal care for persons in need (personal care includes assistance with washing, eating, etc; this can include medical treatment that is required in order to contain a condition or assist with a person’s rehabilitation), such as:

    1. old people

    2. disabled people

    3. people with drug or alcohol dependency (past or present)

    4. people suffering from a mental disorder

  3. a hospice

  4. residential accommodation for students or pupils

  5. residential accommodation provided to the armed forces

  6. a nunnery, monastery or similar establishment

  7. accommodation that is used by at least 90% of the residents as the place of residence

VATA 1994, Sch 7A, Group 5, para 6; VATA 1994, Sch 8, Group 5, Note 4

The following are specifically excluded from the meaning of RRPs:

  1. hospitals and similar institutions

  2. prisons and similar institutions

  3. hotels, inns or similar establishments

VATA 1994, Sch 7A, Group 5, para 6; VATA 1994, Sch 8, Group 5, Note 4

A number of the ‘uses’ above are explored further in this guidance note.

What is a home or institution?

Several of the possible ‘uses’ for RRPs refer to ‘homes’ and ‘institutions’.

What is a home?

HMRC suggests in its VAT manuals that ‘home’ in this context refers to ‘a place, where a collection of people live together under rules set by a third party’. When looking at whether a building is a home, it will be necessary to consider

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