It is common for new builds to either begin life as extensions / partial build – either becoming full demolition by a gradual erosion of the planning process or due to unforeseen structural weaknesses. Zero rating for new builds hinges on the Demolition Test, a key aspect of the test being that planning consent is in place for the full demolition of any existing structures.
In Nigel Williams, it was found that whilst retrospective planning permission had been granted for full demolition & new build, the scheme began as a partial demolition & extension. Accordingly in VAT terms the ‘new build’ only began when the retrospective consent was awarded and not when it was effective.
Zero Rating was therefore not permitted on works undertaken prior to the later consent being awarded. We see this often where consent is applied for as ‘enlargement & extension’ (perhaps to take advantage of Permitted Development Rights) but then morphs into a full demolition and rebuild (to said larger footprint). Whilst in reality a new build has occurred, without the formal [advance] permission for demolition; zero rating is unlikely.