Zero rating on property renovation costs

The taxpayer bought and renovated two houses. The previous owner certified that neither had been lived in since 2005-06.

The taxpayer treated the sales of the properties in July and June 2017 as zero rated on the basis that they had not been used as dwellings for at least ten years (VATA 1994 Sch 8 group 5 note 7 item 1(b)). If the empty period was shorter than ten years the sales would be exempt from VAT. HMRC disallowed the claim and the taxpayer appealed.

HMRC accepted before the hearing that one of the homes had been empty for more than ten years so qualified for zero rating but produced three independent pieces of evidence that confirmed the other had been occupied until November 2008:

• PAYE records for an employee who was living at the address;
• documents from the local authority...