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VAT on listed buildings

Posted on August 16, 2012 by Forde George

Its been another fascinating day for Forde George.

Well VAT will not only still be due on essential repairs to Listed properties but it will now apply to alterations as well.  Perversely the argument for the change has been the lack of incentive to repair rather than alter – so why not introduce the zero rating for repair? thanks to the LPOC for the following information:
Following the budget last week and with particular reference to VAT and Listed Buildings, our tax advisor is telling us that:

The basic position is that all work carried out prior to 1 October will still benefit from zero rating, where applicable.   Work carried out thereafter will be liable to VAT at 20%.   There are, however, a couple of variations/conditions:

Any work, for which the contract has been placed, prior to 21st March 2012, will still be zero rated up until 21 March 2013.

There will be anti-avoidance measures put in place, such that if someone invoices work in September (no VAT), but carries out the work after 1 October, HMRC will be able to charge 20% on that work.  This would also apply if someone simply placed a deposit prior to October for work carried out afterwards.

Works unaffected that still qualify for the 5% VAT rate:

Empty for 2 years prior to work starting.

Converting a property from two dwellings into one, or vice versa.  In fact any conversion resulting in a different number of dwellings.  Best  example was one where a staff flat, which was not needed, all repair/refurb work changed from 20% to 5% VAT.

Converting from commercial use to residential use.

Also unaffected will be ‘Self build’ claims. (VAT refund scheme for properties empty for 10 years  or more, or subject to a commercial to residential conversion.)

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