My Dad would have been 101 on Thursday 19th October had he lived.  So ever year, around this time, I’m incredibly lucky to remember the most wonderful, loving, principled, sensible and strong man.  We were very fortunate to have wonderful parents.

When my father was a child, radio was a new invention, while cars and telephones were very rarely seen in the poorer parts of the UK.  My father was very intelligent, but like many of his generation had to leave school aged 14 and never had the benefits of a good education.  But he was fascinated by the many developments of the 20th century and I can remember, as a school girl, both of us being absolutely amazed watching pictures from the surface of Mars when the first rovers were sent in the 1970s.

One small squiggly letter and property development….

But one effect of all of this is that life is so much more complicated nowadays.  As usual, I’ve a good VAT example to illustrate.  And it’s all about the situation when one letter means the difference between 5% and 20% rate of VAT and a great example of how one small squiggly letter can make a significant difference to the VAT cost of a property development.

Last year, HMRC issued R&C Brief 13/2016: VAT: the liability treatment of a dwelling formed from more than one building: http://tinyurl.com/hddfqmy. 

The Brief sets out a change in policy by HMRC, explaining that HMRC now accepts that single dwellings can be formed from more than one building.

Is it a building or buildings?

Now you might not think that this is a particularly important issue, but in fact it’s quite a U-turn for HMRC because the Brief goes on to explain that HMRC now accept that the zero-rate of VAT and the reduced rate apply to the construction of new dwellings and certain conversions, even if the dwelling consists of more than 2 unattached buildings.  This issue it all hinges round the fact that the VAT legislation talks about “building” i.e. the singular, while the VAT Tribunals have taken the view that “ it was appropriate to interpret the law as allowing the construction of dwellings formed from more than one building, to be eligible for zero-rating. HMRC, having accepted this decision, considers that it can, in principle apply to some conversions.”

So, all of this fuss because the law says “building” but in real life, dwellings can and do exist and function properly if they consist of more than 2 or more “buildings”.  In this situation, that little letter “s” can make a significant difference to the costs of a new or converted property.

Also interesting is that the Brief does NOT mention renovations, which is a bit odd given that the legislation for the 5% for conversion services is the same as that for renovations.  That’s probably a topic for a different blog.

Either way, it’s quite bizarre that only little squiggly letter can make such a difference to the potential cost of a property development.

But for today, I’d rather spend time remembering some of the lovely memories of my Dad, Arthur Strickland.

Marie Stein

October, 2017