The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note looks at the zero-rating of construction services for certain new buildings.
For an overview of the liability of construction services more broadly, see the Overview ― construction, conversion and renovation guidance note.
Detailed commentary on the legislation and case law can be found in De Voil Indirect Tax Service V4.238.
Businesses can zero-rate supplies ‘in the course of construction’ of the following kinds of new buildings:
buildings designed as dwellings (see definition in the Buildings and construction ― definition of dwelling guidance note)
buildings which will be used solely for a relevant residential purpose (see definition in the Buildings and construction ― definition of relevant residential purpose (RRP) guidance note)
buildings which will be used solely for a relevant charitable purpose (see definition in the Buildings and construction ― definition of a relevant charitable purpose (RCP) guidance note)
VATA 1994, Sch 8, Group 5, Item 2
In some circumstances, it will be necessary to hold a zero-rating certificate in order to be entitled to zero-rate the supply. There are also a number of types of service which are specifically excluded from the zero-rating for construction services.
This is explored further in this guidance note.
The word ‘building’ has not been defined in the legislation. HMRC’s view is that in the absence of a legal definition, it should be given its natural meaning, ie:
it is a structure
it is fixed to the ground
at a minimum, it consists of walls (or an alternative, like an arrangement of columns)
the walls (or their alternative) support a roof that encloses a volume of space
The structure will also generally have sufficient scale for human occupation and be made of durable materials (such as brick, timber, etc). Structures like bridges and boats are not seen as buildings.
Detailed commentary on case law which has examined the meaning of ‘building’ can be found in
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