New for old

The taxpayer company undertook construction work on a building that had residential and commercial elements.

The firm claimed the residential parts – flats on the first second and third floors – were zero rated for VAT because the building qualified as new.

HMRC said all the work should be standard rated although the residential element qualified for the 5% rate because the building was the existing one.

The taxpayer argued that the building was new because the rear wall had been demolished and rebuilt. The company appealed against the taxman’s decision.

The First-tier Tribunal reviewed photographs taken before and after the work and concluded the wall had been demolished and rebuilt: bricks in the new wall were not in the same position as in the original and new wall was wider than its predecessor.

The front and side facades were original but the tribunal accepted...