Tribunal rules on VAT treatment of ‘fractional interest’ in residential property

In the First Tier Tribunal (FTT) case of Fortyseven Park Street Limited, the appellant owned a leasehold interest in a property divided into 49 residences.

It sold ‘fractional interests’ to individuals that entitled them to stay in the residences for up to 21 nights per annum; documented by a ‘membership agreement’.

The FTT ruled that the supply was not that of a membership, nor a right over land that would qualify for exemption from VAT.

Instead, it ruled that the supplies were taxable supplies of an establishment similar to a hotel, as there were ancillary services supplied akin to those provided by a hotel.  In distinguishing other similar case, the FTT stated that a determinative factor in this case was that the customer knew precisely what it was purchasing at the time of payment.

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