What is a dwelling?

For years, HMRC maintained that a dwelling can only comprise one building.  Now, however, they do accept that a dwelling can have more than one building.  There are conditions, of course, for which see Revenue & Customs Brief 13/2016.  The difficulty with it is that, as ever, they pass the onus on to the contractor to get it right – and then refuse to help, if the builder seeks a bit of comfort.  “We are not obliged to provide a clearance where the answer is to be found in our published guidance”


Example 1:  A year or two ago I was involved in a new-build project, where the finished dwelling included a studio in the garden.  I was obliged, under the then rules, to tell the client that the house would be 0% VAT (well, most of it), but the studio would be 20% VAT.  Good news now, though.  HMRC (in the Brief) have said that if someone has had a project over the past four years and paid VAT unnecessarily, they can get it refunded.


Example 2:  about 20 years ago, I was heavily involved in a case by the name of “Zielinski Baker”, which progressed through the VAT Tribunal up to the High Court, the Court of Appeal and ultimately the House of Lords, which effectively ruled that a dwelling can only have one building – even although in that case, the ‘outbuilding’ was connected to the main house by a substantial wall.  It now turns out that the case was decided incorrectly by the Law Lords.  Because it happened more than 4 years ago, the home-owner will not be able to get his money back.  But it is good to be proved right, even if it did take a while.

Two weeks on – just been doing some old filing and I came across an article I did for CCH, one of the main accountancy publishers in 2002 following the Court of Appeal decision in Zielinski Baker, mentioned above.    I finished the article thus – “Without this decision, Customs would be in the position of imposing their lofty view, that a household cannot comprise more than one building.”   As it turns out, HMRC have now agreed that it can..

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