In an important decision for social landlords, the First-tier Tribunal (FTT) has ruled that a company which provides large numbers of homes for temporarily homeless people is not entitled to add VAT to bills payable by its predominantly local authority clients.
The company owned numerous semi-detached or terraced houses which were fitted out in a fairly basic manner for short-term occupation although, in practice, residents often stayed for months or years before permanent homes were found for them.
The company submitted that the homes on offer were akin to hotels, inns or boarding houses and that VAT was therefore chargeable at the standard rate on the services it provided. HM Revenue and Customs (HMRC), however, took the view that the company was making ‘supplies of land’, exempt from VAT.
Dismissing the company’s appeal, the FTT noted that the company provided very limited services to occupants of its properties. Once they had been given the keys, residents were responsible for cleaning the properties and the main service provided by the company was to collect and empty waste bins once a week.