In Summit Electrical Installations Limited v HMRC [2017] TC06006, the First-Tier Tribunal (FTT) ruled that where a building qualifies as both a dwelling and a relevant residential property the subcontractor can give the dwelling precedent and zero rate its supplies.

Where a property under construction is designed as a dwelling, or number of dwellings, every supplier in the construction chain, i.e. subcontractors and contractors, can zero rate their supplies.

Where the property is a relevant residential property and not a dwelling, only the contractor, on receipt of a certificate confirming how the property will be used by the developer, can zero rate supplies to the developer. The subcontractors cannot zero rate supplies to the contractor.

No certificate is required where the property qualifies as a dwelling.

In this case, the property was found to qualify both as a building designed as a number of dwellings, and as a relevant residential property:

  • Summit is a subcontractor
  • Summit were given a certificate from the contractor stating that the property was to be used solely for a relevant residential purpose. In this case, student accommodation.
  • Planning permission prohibited anyone occupying the 140 studio flats, unless they attended one of two Universities in Leicester or managed the block of flats.
  • Summit zero rated its supplies. HMRC assessed them for VAT and Penalties for error stating that they could not rely on the certificate. Only the contractor could zero rate its supplies and rely on the certificate.
  • Summit appealed on the basis that the property also qualified as a number of dwellings, and this allowed it to zero rate its supplies.

HMRC put forward the following arguments:

  • The property could not qualify as a dwelling or number of dwellings, as the planning permission prohibited the separate use or disposal of the individual studio flats.
  • Even if it were both qualifying as a number of dwellings and solely for a relevant residential purpose, the certificate provided by the developer should dictate how the entire supply chain should approach the supply, i.e. that it is a relevant residential property, not a dwelling.

The FTT allowed the taxpayer’s appeal:

  • Leicester has around 30,000 students attending the Universities. This is larger than many towns or villages, so there was no real restriction on the number of people who could occupy the properties.
  • In order for the planning restriction to cause the property to fail to meet the definition of a dwelling, the condition must somehow be linked to specific land (e.g. must work on the farm where the cottage is present). This was established in previous case law. There is no specific land associated with this planning restriction.
  • The property therefore qualified as both a dwelling and a relevant residential property.
  • There is no basis for HMRC’s view that a certificate provided by someone else in the supply chain should dictate how everyone treats their supply.
  • Each supplier must determine for themselves whether the property meets the definition of a dwelling: if it does, then they can zero rate the supply.

In this case, the FTT concluded that it was clear that the property qualified as a dwelling and Summit could zero rate its supplies to the contractor.


The Upper Tribunal have upheld the FTT's decision and dismissed HMRC's appeal. See Student accommodation is still a dwelling for VAT.


External link: Summit Electrical Installations Limited v HMRC [2017] TC06006


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