12 June 2018 
Amanda Darley, Head of Operations and Engagement
HMRC suffered a defeat at the Upper Tribunal ('UT') in the Summit Electrical case when they tried to argue that a development of cluster flats was not a 'dwelling' for VAT purposes due to the terms of the planning consent. HMRC argued that a planning restriction on the student cluster flats in Leicester stating they must only be let to students of the town's two universities amounted to a prohibition on the separate use and disposal of the flats, which would mean the building wouldn't meet the criteria to be a dwelling where the construction costs can be automatically zero-rated.
The UT disagreed with HMRC, so the development is zero-rated. The UT confirmed that in order for there to be a prohibition on separate use and disposal there must be a tie to some specific building or piece of land, rather than to one (or, as in this case, more) institution which itself could relocate to a different site. It remains to be seen whether HMRC will appeal this decision any higher.
