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Big bungalow

13 December 2011
Issue: 4334 / Categories: Forum & Feedback , VAT
A builder had a large contract to provide building services constructing a new bungalow on land owned by a farmer. He zero-rated his building services because he was building a new dwelling from bare land, but HMRC are charging VAT on the basis the bungalow cannot be sold separately

I have a client who is a builder who had a large contract to provide building services constructing a new bungalow on land owned by a farmer.

The bungalow is on its own plot of land adjacent to the farmhouse and will be lived in by the farmer’s mother-in-law even though it is owned by the farmer and his wife.

The mother-in-law used to live in the main farmhouse with the farmer and his wife but they argued too much – hence the need for the new bungalow.

My client zero rated his building services to the farmer because he was building a new dwelling on bare land but HMRC are now trying to assess VAT against my client because apparently the bungalow cannot be sold separately from the main farmhouse.

This seems a bit strange: how would my client know this ...

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