A new leaflet on VAT has been published by HMRC dealing with ‘extra care’ accommodation.

 This is accommodation which is  as set out by HMRC ‘sold or let with the option for the occupant to purchase varying degrees of care to suit his or her needs as and when they arise’.

 HMRC accepts, regardless of the Use Class, that extra care accommodation is ‘designed as a dwelling’, and therefore its construction and first sale or long lease will be zero rated, if it meets all of the standard conditions, which are as follows:

• the dwelling consists of self-contained living accommodation there is no provision for direct internal access from the dwelling to any other dwelling or part of a dwelling
• the separate use of the dwelling is not prohibited by the terms of any covenant, statutory planning consent or similar provision
• the separate disposal of the dwelling is not prohibited by the terms of any covenant, statutory planning consent or similar provision
• statutory planning consent has been granted in respect of that dwelling and its construction or conversion has been carried out in accordance with that consent

This guidance has been long awaited and will assist those working on and planning sites which involve elements of ‘extra care accommodation’.  HMRC intends to consider other types of accommodation later this year and their VAT treatment.

Specialists at DTM work closely with clients within the care sector including developers, for further information on these services please contact Thomas Pearson.