Buildings and construction (VAT Notice 708)

Hi , I just wanted to confirm that for section 8.3.4 People living in the premises whilst you carry out the work, that only either Rule 1 or Rule 2 needs to be satisfied and not both rules to qualify for the reduced VAT rate? In my case, I have owned a residential property for 2 years and never moved in or done any work on the property and therefore the renovation work can be undertaken any time at the reduced VAT rate even if I move in after work has started under Rule 1, and, I can ignore Rule 2? Thanks

Hi DaveSmith,
You are correct is assuming that only 1 of the 2 rules needs to be satified. 
Thank you.

According to Rule 1 refurbishment work on a single household dwellings can be reduced rated.  The building just has to be empty for 2 years before work commences. Rule 2 applies to domestic dwellings only but these rules are more restrictive. If only one of the rules apply you would choose Rule 1 to avoid the restrictions, so if this is the case, what is the purpose of Rule 2? Is Rule 2 an exception to Rule 1, as stated in paragraph 8.1.1, bullet point 1, providing additional rules for single household dwellings (the final paragraph of 8.3.4 says the exception does not apply to other qualifying residential premises)? If this is the case, should both rules be followed with greater restrictions on single household dwellings? Many thanks.

Hi,

We would say that Rule 2 has less restrictions than Rule 1.
Rule 1 confirms that the work must begin before the property is being occupied.
Rule 2 confirms that the house can be occupied before the work begins as long as there is proof of the house being unoccupied for the previous 2 years and the building work takes place within 1 year of the property being acquired:

You can reduce rate your services of the refurbishment or alterations to a ‘single household dwelling’ where all the following conditions are met:
The 2 years immediately before the occupier acquired the dwelling it had not been lived in.
No renovation or alteration had been carried out in the 2 years before the occupier acquired the dwelling, you can ignore minor works that were necessary to keep the dwelling dry and secure.
Your services are supplied to the occupier, so if you are a subcontractor you must standard rate your work.
Your services take place within 1 year of the occupier acquiring the dwelling.
This exception to occupation will not apply to the renovation or alteration of multiple occupancy dwellings or buildings intended for use for a relevant residential purpose.

Thank you.

This: "..confirms that the house can be occupied before the work begins as long as there is proof of the house being unoccupied for the previous 2 years". is so much clearer than this: "The 2 years immediately before the occupier acquired the dwelling it had not been lived in". Thank you.