Zero-rating denied

Conversion of residential and non-residential properties

The appeals were directed to be heard together because they concerned zero-rating of converted properties.

In Languard the company had bought a public house for which it had obtained planning permission to convert into four self-contained maisonettes. The pub had consisted of three floors: a ground floor which had been commercial and a first and second floor both of which had been used as accommodation by the pub manager.

It was converted vertically so that the ground and first floor comprised two maisonettes; the other two were converted from the second floor and the addition of another floor.

In 2011 the taxpayer sold each maisonette to third parties. It treated the sales of the maisonettes that used the commercial floor as zero-rated (VATA 1994 Sch 8 group 5 item 1(b)). The other two were agreed as exempt because...