Too restricted

The taxpayer was a director of a retirement park of static caravans for older people. He obtained planning permission to knock down and rebuild a bungalow on the site but instead bought the adjacent paddock and received planning permission to build a new house.

Permission was given subject to the condition that occupation of the property was limited to a person who worked or had worked at the retirement park.

The taxpayer applied to HMRC for repayment of VAT incurred on the building under the DIY scheme. The department refused because of the restricted use clause that did not satisfy VATA 1994 Sch 8 group 5 note 2(c).

The taxpayer appealed.

The First-tier Tribunal agreed that the clause meant the property failed one of the tests for the DIY scheme to apply. The wording of the permission at the time of the build was relevant regardless...