Listed Buildings and VAT

By Les Howard of vatadvice.org
At Stand A16 CRE Manchester  from 10th October

The Chancellor was unique in being booed during the Olympics. He has also been booed in a number of business and charity sectors as a result of his Budget earlier this year. In his attempt to clarify anomalies (his words), he has further burdened hot food retailers, self storage operators, and, most significantly, owners of Listed Buildings, including numerous churches.

Major changes take effect from 1 October 2012 and transitional rules until 30 Sept 2015. In common with VAT regulations generally, they are not straightforward.

The main problem area is where there are ‘Approved Alterations’ to a Listed Building. Such works were previously zero rated, and thereby provided a helpful mitigation of the costs incurred in maintaining such historic buildings.

The original proposals were somewhat amended, which will assist some churches. Hold tight, this is not easy!

Zero rating is abolished for all works carried out after 30 September 2012. Anti-forestalling rules prevent the use of pre-payments to mitigate the effects of the change.

However, if either Consent was applied for, or the construction contract was signed, before 21 March 2012, then zero rating will continue until 30 September 2015. This will, of course, assist those churches already committed to projects. I have contacted two churches over the summer to give them this good news. In both cases, the projects would have suffered significantly had costs increased by 20%.

There are lots of other specific situations which will arise. For example, what if the contractor identifies other work that needs doing, or an additional Consent needs to be obtained. HMRC have issued an Information Sheet 10/12 that seeks to answer such questions. However, as always, HMRC will give information, not advice.

The Listed Places of Worship Scheme has been extended, to compensate for the VAT changes. This Scheme provides a grant to fund the VAT costs of certain repair works. Although the Scheme is not operated by HMRC, it does bear some relation to VAT.

• Les Howard deals with all sorts of VAT matters. And this year, for the first time, he is taking a stand at the Northern Christian Resources Exhibition. You will find him at stand A16.

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