Listed buildings - VAT zero rating demolished
Please note, there have been further changes to the transitional rules. To read these, please click here.
Although there is to be further Government consultation it is almost certain that, with effect from 1st October 2012, the VAT zero rating for approved alterations to listed buildings will come to an end. This will have a considerable impact on owners of listed dwellings as well as listed relevant residential properties, such as nursing homes or student accommodation and relevant charitable buildings, such as place of worship, village halls etc.
This change means that VAT will be charged at 20% on all works of either approved alterations or repair and maintenance, subject to transitional arrangements and anti-forestalling legislation which came into effect on 21 March 2012. At the same time zero rating of the first sale or long lease of a substantially reconstructed listing building will be restricted to instances where the building is reconstructed from a shell.
The transitional arrangements will protect contracts for approved alterations which have been signed before 21 March; however, the works must be completed by 21 March 2013. In all other cases, the anti-forestalling provisions limit the zero rating to works completed before 1 October 2012.
Although this news is certainly unwelcome it’s not all bad news as supplies of conversion services remain liable to VAT at the reduced rate of 5%. Therefore, if a listed building has never been previously used as a dwelling but will become a dwelling following the work or if already a dwelling it has not been lived in for two years prior to the works commencing there is still VAT planning available.
If you would like more information, please contact the VAT team at Johnston Carmichael and discuss the possible ways of minimising VAT costs.
Edinburgh
Graham Seager, Head of Tax. 0131 220 2203. graham.seager@jcca.co.uk.
Glasgow
Paul Cochrane, VAT Manager. 0141 222 5800. paul.cochrane@jcca.co.uk.
Aberdeen
Fiona Masson, VAT Manager. 01224 212222. fiona.masson@jcca.co.uk.
Inverness
Alan Main, VAT Manager. 01463 796200. alan.main@jcca.co.uk.
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