The recent tribunal of Boxmoor Construction Ltd highlights the need for early consideration of the VAT rules when constructing a new dwelling with a retained façade. In particular, the need for there to be a level of unity between what is actually demolished and built on site and the original planning application describing the works concerned. There needs to be a degree of ‘specificity’ regarding the façade retention if the scheme is to meet the conditions for the zero VAT rate to apply to qualifying construction works.
In Boxmoor the works were described in the planning consent as being extensions and roof alterations. However the works on site involved the substantial demolition of the building apart from a small part of the front façade. HMRC took the view ( a view that was ultimately confirmed by the Tax Tribunal) that zero rating was not available as there was no condition or requirement to retain the front façade in the relevant planning consent.