In HMRC v Summit Electrical Installations Limited [2018] UKUT 0176 (TCC), the Upper Tribunal (UT), dismissed HMRCs appeal, finding that student accommodation could still qualify as a dwelling despite planning restrictions on eligible tenants.

This decision follows the earlier First-Tier Tribunal (FTT) decision, which found that a property that qualifies for both reduced rating as a relevant residential property, but also as a dwelling, can be zero-rated, effectively giving dwelling preference.

The appeal was solely on whether the property qualified as a dwelling.

  • Summit were contracted to complete electrical works for student accommodation.
  • The planning permission prohibited anyone occupying one of the 140 studio flats who was not at one of two Universities in Leicester, or who managed the block of flats.
  • HMRC contended that this constituted a prohbition on the separate use or disposal of the flats.

The UT agreed with the findings of the FTT:

  • The law should be taken as follows:

"A prohibition on separate use for the purposes of whether a property qualifies as a dwelling for zero-rating of construction, will not be found unless the effect of the relevant term... is to prohibit use of the premises separately form the use of other specific land".

  • The reference in the planning permission was not a restriction by reference to specific University buildings, but rather specific Univesities, i.e. attendance at the University.
  • If the University expanded and additional buildings for lectures etc. were built, the planning permission would not prohibit those students only attending the new site from living in the flats.
  • Based on the above, the prohibition in the planning permission, did not result in the property failing to meet the definition of a dwelling. Separate use from other specific land, was not prohibited.

The UT did confirm that they disagreed with the FTT in that, the UT found it did not matter that Leicester has 30,000 students attending the University, meaning there was no real restriction. The number of potential occupants is not relevant, and had this been the reason for the FTT's decision, it would have erred in law.

HMRC's appeal was dismissed.


FTT decision: Dwelling takes precdent over relevant residential

Land & Property VAT (notes)

Land & Property VAT at a glance

External link HMRC v Summit Electrical Installations Limited [2018] UKUT 0176 (TCC)


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