HMRC have published a brief clarifying their position on the VAT treatment of the conversion of non-residential properties into dwellings where statutory planning consent is no longer required.  

This includes conversions by claimants under the DIY Housebuilders Scheme.

Permitted Development Rights (PDRs) have been introduced to streamline the planning process by removing the need to obtain full statutory planning consent for certain property conversions.

In England, PDRs permit the conversions of buildings such as shops, offices and agricultural buildings into dwellings.  PDRs have more restricted application in Wales and have not been introduced in Scotland or Northern Ireland.

The conversion of non-residential property into a building designed as a dwelling or dwellings is zero-rated, however in order to meet the legal definition of 'designed as a dwelling' statutory planning consent must have been granted, and the conversion must be carried out in accordance with that planning consent.

HMRC confirm that the conversion of non-residential property without statutory planning consent will continue to be zero-rated but that they will require evidence to be produced to show that the work is lawful, such as written notification from the local planning authority advising the grant of prior approval or advising that prior approval is not required.


Revenue & Customs Brief 9 (2016)


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