Upper Tribunal confirms that the creation of a nursing home qualifies for zero-rating

The Upper Tribunal has released its decision in the case of Astral Construction Ltd, in respect of the construction of a nursing home on the site of an old church, which was retained as part of the much larger structure on the site that comprised of a new nursing home.  The First-tier Tribunal agreed with Astral that this amounted to the construction of a new building that qualified for zero rating.  However, in the Upper Tribunal, HMRC tried to argue that the fact that the old church remained meant that the work could not qualify for zero rating and that rather than being subject to the zero or reduced rate of VAT it should have been standard-rated.  All of HMRC's contentions were rejected by the Upper Tribunal, which agreed that the First –tier Tribunal had directed itself properly and reached a conclusion that was open to it on the facts it found.

We often see that HMRC question the VAT liability of construction / conversion works and there is often scope for challenging the decisions that are made.  Therefore, please call our free helpline to discuss the correct VAT liability of any works that may be planned by your clients.


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