Date of supply

The taxpayer was a limited company that acquired the freehold interest in a hotel and converted it into four properties which were later sold as zero-rated dwellings.

HMRC decided the properties should have been standard rated because they were sold as holiday homes. The department raised an assessment to collect the VAT and the taxpayer appealed.

The original planning permission decreed the properties should be classed as holiday accommodation and as such could not be used by the owners for the first three months of the year.

The restriction was later removed and the taxpayer argued the buildings were eligible for zero rating.

The First-tier Tribunal said VAT arose when a taxable supply was made. In this instance the supply was made when the leases were granted. It would be “fanciful” to say it could be varied because of a subsequent amendment to the planning permission.