VAT discount on 2 year empty homes

21/05/2019 07:16:32
I am seeking clarification on when to send a VAT reduction letter for empty homes.
I understand when a dwelling is empty for two years, a VAT letter can be issued confirming such, which results in a 15% VAT reduction.
However, I have a situation where an empty dwelling, in excess of two years, was sold. The new owner furnished sparsely, perhaps to avoid paying 200% council tax, instead being charged 100% council tax as a furnished second home.
He advises the dwelling is visited occasionally, however, is about to commence large scale works and would like a VAT reduction letter.
Although the classification of the dwelling has changed, I have had verbal confirmation from HMRC that this does not matter and the VAT letter can be issued for the 15% reduction.
This seems to contradict what I read in the Section 708 notice, 8.3.3. This states if a dwelling is being used occasionally as a second home, then the VAT cannot be reduce rated.

Could I please have some clarification? Thanks in advance.

Re:VAT discount on 2 year empty homes

21/05/2019 08:26:14

You can only reduced-rate the renovation or alteration if, in the 2 years immediately before renovation works start, the qualifying residential premises has not been lived in.

You mentioned that the property has been furnished, and visited occasionally, but it’s not clear whether or not it has been lived in.

As noted in Section 8.3.3, If the dwelling has been lived in on an occasional basis (for example, because it was a second home) in the two years immediately before you start your work you cannot reduced-rate your supply.

If you reduced-rated your supply, you may be required to show that the building has not been lived in during the 2 years immediately before you start your work. Proof of such can be obtained from Electoral Roll and Council Tax records, utilities companies, Empty Property Officers in local authorities, or any other source that can be considered reliable.

Please refer to all the guidance in Section 8.3 of the VAT Notice on Buildings and Construction for further information on checking if the premises have not been lived in for two years or more:

Reduced-rating the renovation or alteration of empty residential premises