The construction of a building intended for use solely for a relevant residential purpose (and the  first grant of a major interest in such a building by the person constructing it), are zero-rated  for VAT purposes.

To qualify, the user of the building must (before the supply is made) provide a certificate to the  builder or developer as evidence that the building is intended to be used, at least 95%, for a  relevant residential purpose.

On 31 January 2014, HMRC published a technical note which announced the withdrawal from 1 April  2015 of two concessions allowing:

  • Higher Education Institutions to ignore vacation use when determining how new student  accommodation is intended to be used; and
  • dining rooms and kitchens to be zero-rated as residential accommodation for students and school pupils if they were used “predominantly” by the living-in students.

Following further consultation, HMRC has widened transitional rules which determine which  incomplete student accommodation buildings can rely on the concession.

To read the original Technical Note click here To read Revenue & Customs Brief 14/14, which sets out the revised transitional rules, click here