HM Revenue and Customs have issued a new VAT leaflet dealing with ‘extra care’ accommodation, which is accommodation which is ‘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 accept 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.