Separate use

Zero rating on student accommodation

Summit was an electrical subcontractor working on a block of student studio flats. It said its supplies were zero rated because the accommodation was designed as ‘a number of dwellings’ (VATA 1994 Sch 8 group 5 items 2 and 4). HMRC disagreed saying the terms of the planning consent prohibited the separate use of the dwellings. Therefore the requirement of note 2(c) was not satisfied. The flats could be occupied only by students of the University of Leicester or De Montfort University.

The First-tier Tribunal allowed the taxpayer’s appeal.

The Upper Tribunal referred to CRC v Shields [2014] UKUT 453 and CRC v Burton [2016] UKUT 20 as authorities that a prohibition on separate use would not exist unless the effect of the relevant term in a particular case forbade the use of the premises separately from the use of other specific land. The judges said...