Tribunal declines HMRC appeal on student property VAT

Tribunal declines HMRC appeal on student property VAT

10:35 AM, 19th June 2018, About 6 years ago

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There has been a win for companies building student accommodation, landlords and universities reducing VAT costs on student flats rented out during holidays.

HMRC appealed against a ruling that student accommodation could be treated as ‘dwellings’ for VAT purposes.

The tribunal turned down the argument by HMRC that a planning condition which restricted occupation to students of named universities prevented the accommodation from being dwellings for VAT purposes.

However, it was successfully argued that the flats/units were all self contained and could be used or sold separately despite it being a communal building for students

Now main contractors will not be forced to pay VAT to subcontractors whenever planning consent refers to students of specific universities so main and sub-contractors can zero rate their services.

VAT Director at MHA MacIntyre Hudson, Glyn Edwards, said: “The Tribunal’s decision reaffirms that the VAT policy for student accommodation needs clarification. HMRC must acknowledge this and provide better guidance for the construction sector to avoid similar situations arising.

“Confirmation that wider relief for zero-rating of dwellings still applies has been welcomed by landlords, planners and universities, reducing VAT costs that would otherwise have applied to those renting out student flats during holiday periods. This is vital to student accommodation projects as incurring a VAT charge that could not be reclaimed would make many developments unviable, reducing availability of accommodation for new students.”

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