HMRC has issued a response document to the consultation process on the VAT changes introduced in the Budget. This is the first in a number of updates which we will be issuing on the issues addressed within this 57 page document and how the VAT changes are now to be introduced.
As far as the changes to the zero-rate on approved alterations to listed buildings is concerned the document contains some good news on the transitional period.
The document summarises the points made by many respondents within the charity, care and building sectors as well as individuals owning listed properties. It then outlines revised qualifying conditions and an extended transitional period.
Zero-rating will now be allowed for eligible approved alterations on projects where listed building consent had been applied for before 21st March 2012 (not just where a signed written contract was in place before Budget Day) and these projects will continue to benefit from zero-rating on works completed to 30th September 2015.
VAT Director, Steve McIntyre sees this as good news for all who are undertaking listed building projects as it allows a more acceptable period of time in which projects will continue to benefit from zero-rating, even though the measure to remove the zero-rating on approved alterations will remain.
Karen Mulcahy, Senior Manager, further comments that nevertheless, there will be a number of interested parties who will disappointed that the proposed measures have not been subject to the ‘u-turn’ that other measures have benefitted from.
In addition, we are also still waiting for further detail on the revisions to the Listed Places of Worship scheme.
If you want further detail on this item or any other VAT issue please call The VAT Consultancy on 01962 735350.
With the unexpected news in last month’s Budget announcing the removal of the zero rate for alterations to protected buildings, our resident VAT and property experts Karen Mulcahy and Sarah Franklin will be holding a FREE webinar on Thursday 19th April at 12.00 midday to discuss the practical implications of these changes.
Aimed at Architects, Property Developers and anyone who is currently involved in or advising on a project of this kind, you will:
- Find out the specialists’ view on the proposed changes
- Understand the implications for you or your clients’ projects
- Opportunity to join the discussion
- Take a part in responding to the consultation document
To register your place click here
A costly reminder that having the correct planning permission in place prior to works commencing has been highlighted in the recent case of building contractors AbbeyTrust Homes Limited. Zaenia Rogers, Consultant at The VAT Consultancy, takes a look.
The main point of the appeal revolved around the planning permission for a new build. In short, when HMRC requested a copy from the contractor of the planning permission to substantiate the zero rating on their construction supplies (and thus a large repayment return of c£34k), it was found that the permission actually stated that an extension was taking place. The case continues with retrospective permission being granted, but the Tribunal quite rightly stated that there is “no basis by which the retrospective provision of the planning consent many months after the Appellant had received payment for supplies can alter the tax treatment of those supplies”.
It is useful to note HMRC did accept that any payments for services after the retrospective permission was granted could be at the zero rate, but that condition (d) of Note 2 of Schedule only states a building is a dwelling if the relevant statutory permission has already been granted.
Whether you are the property owner, contractor or architect, we would always advise that the impact of VAT needs to be considered at the very beginning of any building project.
The impact of not having the correct planning permission in place at the beginning of the project as highlighted in the case above would have an effect on all budgetary aspects of the build, not to mention the cost and stress associated with the legal struggle to get the situation corrected.
We can work with you on your planning permission request to ensure you achieve the VAT rate you require to minimise VAT as a cost to the project as well as work with contractors along the way to ensure they are applying the right rate of VAT to their supplies. Land and property is a notoriously complex areas of VAT, yet one of the areas where, if managed carefully, the potential for VAT savings is enormous.
If you would like to discuss wording for your planning permission to ensure you achieve the VAT rate you require for your building project or if you need any other VAT element of your project confirming, then please do not hesitate to contact me: firstname.lastname@example.org.