Not just an extension

The taxpayer company built a residential home on the site of a church.

The presbytery social club outbuildings and single storey extensions had been demolished leaving only the original church which formed the main entrance and reception area for the home that had an office shop activity room and a small chapel on the ground floor. There was also a mezzanine floor with accommodation and storage.

HMRC decided the building works were an enlargement of or extension to an existing building and not zero-rated for VAT purposes: the works were the conversion of the church to a relevant residential purpose chargeable to VAT at 5%.

The taxpayer said the works constituted the supply of construction services and should be zero-rated under VATA 1994 sch 8 group 5 item 2. The business appealed to the First-tier Tribunal (FTT) which found in...