VCONST15610 - ‘Relevant residential purpose’ - interpretation of terms: exceptions to use for a relevant residential purpose: hospital or similar institution

A building isn’t used for a relevant residential purpose when it is used as a hospital or similar institution. There is no definition of ‘hospital or similar institution’ in the legislation.

There have been a number of cases on this subject where Tribunals have been asked to decide whether an institution is a hospital or a care home.

Following the decision in Pennine Care NHS Trust (‘Pennine’) (TC04998) HMRC reviewed its policy and accepted that ‘personal care’ may go beyond a supportive and supervisory role (to assist with living). The term may include both therapeutic and clinical treatment that can alleviate or improve the condition of the individual. Personal care may incorporate a high level of medical treatment if it is integral to the accommodation that is being provided.

You have to consider what the building is being used for rather than what it is called to be considered a care home or a hospital:

• Care homes provide personal care with a focus on rehabilitation to enable a person to live, or learn to live, with such support as is needed. This can also include medical treatment necessary to contain a condition or to assist towards a person’s rehabilitation.
• Hospitals provide diagnose and treat illnesses, injuries and conditions that require medical intervention. This can include personal care, but the main purpose of a hospital is to provide medical treatment necessary to stabilise or reduce symptoms or enable recovery. Following treatment, a person is discharged or moved elsewhere.

A building can have provision for a person to be in residence for a lengthy period and still be considered a hospital, if its main purpose is to provide diagnoses and medical treatment. Similarly, a building can provide predominantly rehabilitative care over a short period and still be considered a care home. The facts in each case must be considered to establish what the building is factually being used for.

Mixed use buildings

A distinct part of a building can be used for a relevant residential purpose, whilst another part of the same building can be used as a hospital or similar institution. Note 10 to Group 5 of Schedule 8 VATA allows for apportionment between qualifying and non-qualifying areas. Each area must be clearly defined, such as separate connected buildings on the same site or facility on a different floor. Communal facilities are only used for a relevant residential purpose if used solely (95% or more) by persons accommodated in qualifying areas.