The case of Boxmoor Construction Ltd (TC03951) illustrates the considerable practical difficulties in applying the VAT zero rate rules relating to the construction of new houses.

In this case, the house in question was a replacement to an existing house, but was built on new foundations and everything about it was new bar one bay window which was retained. The law allows the zero rate to apply to a new building which retains a façade as long as it had to be retained as one of the conditions of planning consent.

Unfortunately, the planning consent was couched in terms of being an alteration or an extension, and the detailed requirements of the planning consent did not appear to embrace the notion of a brand new house that happened to retain one façade.