VAT issues on student accommodation are complicated and could catch out the ill-informed. Some of the problems relate to the requirement that the premises are used solely for a relevant residential purpose and the article discusses some of the problems in this area, such as vacation use or operating leases.
Future changes in use or disposals of the premises can carry their own VAT risks and parties cannot always rely on the TOGC provisions or exemption as a fallback. Developers should be wise to avoiding capital goods scheme clawbacks. Risk allocation should be addressed in contractual documentation.
