HM Revenue and Customs Brief 14/14
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Issued 7 April 2014
VAT: Withdrawal of concessions for new student accommodation
and dining halls - widening of the transitional rules.
Purpose of this brief
This Brief announces revised transitional rules following the
announcement by HM Revenue and Customs (HMRC) that concessions
- the construction of new student accommodation
- new dining halls and kitchens for students and school pupils
will be withdrawn from 1 April 2015.
Who should read this?
This Brief should read by those engaged in the construction or
provision of new student accommodation which will be supplied to Higher
Education Institutes (HEIs), and of new dining rooms and kitchens
constructed at the same time as new residential accommodation for
students and school pupils.
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.
As one of the conditions for zero-rating 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 solely (at least 95%) for a relevant residential purpose.
In a Technical
Note (PDF 241K) published on 31 January 2014, HMRC announced
the withdrawal from 1 April 2015 of two concessions which allow:
- Higher Education Institutions (HEIs) to ignore vacation use
when determining how new student accommodation is intended to be used
- 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
Until 1 April 2015, those affected can choose either to use
the concessions or rely on the statutory position.
Following consultation with those affected, HMRC has widened
the transitional rules which determine which student accommodation
buildings that are not complete as at 1 April 2015 can rely on the
concession. The revised rules are set out below.
Certificates which rely on the concession to meet the "solely"
for a relevant residential purpose test (as student accommodation) will
still be valid where:
- for construction services, the first supply is made before
1 April 2015 and relates to a meaningful start to the construction of
the building by that date, and the works are expected to progress to
completion without interruption (demolition or site clearance works
will only be accepted where construction starts immediately afterwards).
- for the first grant of a major interest in new student
- a meaningful deposit (for example, on exchange of
contracts) has been paid to the vendor (or their solicitor) before 1
April 2015 (options to purchase will not be accepted ? irrespective of
- an Agreement for Lease (or purchase) has been signed
with the vendor or landlord before 1 April 2015 and a meaningful start
to the construction of the building has taken place by that date, and
the works are expected to progress to completion without interruption
(demolition or site clearance works will only be accepted where
construction starts immediately afterwards)
For single developments of more than one block of student
accommodation constructed in phases, the above rules apply but:
- 'meaningful start to the construction of the building'
means 'meaningful start to the construction of the first building'
- 'expected to progress to completion without interruption'
means 'expected to progress to completion of all phases without
'Continued reliance on the concession' - There are no changes
to the rules set out in the technical note concerning the continued use
of the concession for the purposes of the change in use charge. But in
order to aid clarity, if you rely on the concession before 1 April 2015
then the concession will continue to apply until the building is no
longer susceptible for consideration for a change in use charge
(typically ten years from completion).
'Late Certificates' - If you can demonstrate to your supplier
that at the time he made his supply, you had the intention that the
building will be used in the way certified and that all the other
conditions (including transitional rules) for zero-rating were met,
then a certificate can be issued later than 1 April 2015 see para 16.6
of Notice 708 on Buildings and Construction.
Who can I contact for further information?
For further information please contact the VAT Helpline on
telephone: 0300 200 3700.
The Helpline is available from 8.00 am to 6.00 pm, Monday to
If you have hearing difficulties, please ring the Textphone
service on telephone: 0300 200 3719.
About the Author
© Crown Copyright 2014.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2014-04-09 11:07:45 in Tax Articles