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AK Jahansouz v HMRC

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In AK Jahansouz v HMRC (TC00637 – 23 August), an individual (J) owned a Victorian two-storey house which was divided into two flats. He decided to construct a third flat above the two existing flats, and claimed a refund of VAT under VATA 1994 s 35. HMRC rejected the claim but the Tribunal allowed J’s appeal, finding that a two-storey building had been converted into a three-storey building and an additional dwelling had been created.

The Tribunal observed that this was not simply a ‘loft conversion’, since ‘typically a loft conversion would be within the confines of the original roof’, whereas J had ‘completely demolished the original roof structure and created an entirely new dwelling which does not incorporate any of the original roof structure’.

Why it matters: This is a useful victory for the taxpayer. The Tribunal specifically rejected HMRC’s view that this was simply a ‘loft conversion’ and held that the appellant had ‘created an entirely new dwelling’.

Issue: 1046
Categories: Cases