What do you get when you buy a new house? A reception room, kitchen, bathroom, bedroom? That is all that is necessary, and you can have that built new at the zero rate. But what if you want a utility room, a games room, a separate dining room, and extra bedroom(s)? Would you expect to be charged VAT on these extras? No. They are all part of the house and thus zero-rated.
What of a swimming pool? Well, if included in the house or as a facility in a block of flats, then it too is zero-rated as integral to the new house. That is the case even if it is an open rooftop pool. But if in an outbuilding, or otherwise removed from the house, it becomes separate and thus subject to VAT.
So I was interested to read the decision in the First-tier Tribunal VAT case of Terry McCann (TC03017) in which the new house was of unusual design. Its lower storey provided most of the accommodation and abutted a hill. The upper part comprised the rest of the house, a terrace, and an outdoor swimming pool. The pool was across the terrace but above the lower floor. There was a retaining wall against the hill, a void for services, and then another outer wall of the house within this service void. The pool was built near the hill, and occupied in effect part of the service void on the outside of the inner wall. So, if we treat that inner wall as an external wall of the house (though that was far from visually apparent), the pool was just outside the walls. It looked to be part of the house though. If we regarded the wall nearest to the hill as the outer wall, then the pool would be ‘inside’ the house and thus part of it.
The tribunal decided that the pool was not part of the new house. For that to be true, it had to be inside the walls of the house, and an external service void and retaining wall was not part of the house. It was admitted that, if the pool were dismantled, the house could fall down, but that alone did not make the pool part of the house.
So, make sure your new house is a box, and the pool is inside the box.
Home >Articles > ‘In the swim’: the lesson from McCann
‘In the swim’: the lesson from McCann
By Graham Elliott, consultant, Withers
What do you get when you buy a new house? A reception room, kitchen, bathroom, bedroom? That is all that is necessary, and you can have that built new at the zero rate. But what if you want a utility room, a games room, a separate dining room, and extra bedroom(s)? Would you expect to be charged VAT on these extras? No. They are all part of the house and thus zero-rated.
What of a swimming pool? Well, if included in the house or as a facility in a block of flats, then it too is zero-rated as integral to the new house. That is the case even if it is an open rooftop pool. But if in an outbuilding, or otherwise removed from the house, it becomes separate and thus subject to VAT.
So I was interested to read the decision in the First-tier Tribunal VAT case of Terry McCann (TC03017) in which the new house was of unusual design. Its lower storey provided most of the accommodation and abutted a hill. The upper part comprised the rest of the house, a terrace, and an outdoor swimming pool. The pool was across the terrace but above the lower floor. There was a retaining wall against the hill, a void for services, and then another outer wall of the house within this service void. The pool was built near the hill, and occupied in effect part of the service void on the outside of the inner wall. So, if we treat that inner wall as an external wall of the house (though that was far from visually apparent), the pool was just outside the walls. It looked to be part of the house though. If we regarded the wall nearest to the hill as the outer wall, then the pool would be ‘inside’ the house and thus part of it.
The tribunal decided that the pool was not part of the new house. For that to be true, it had to be inside the walls of the house, and an external service void and retaining wall was not part of the house. It was admitted that, if the pool were dismantled, the house could fall down, but that alone did not make the pool part of the house.
So, make sure your new house is a box, and the pool is inside the box.
