VAT on Listed Building Residential Annex Alterations

[alfa85]

Hi,

I have outbuldings that I have listed building consent to alter to a residential annex where my parents are going to live. I understand that alterations to listed buildings and zero rated whilst repairs and maintenance are not. The whole building will be altered with an extension, now floors, new roof, new windows, new wiring, new heating etc so in my view the whole scheme is an alteration and should therefore be zero rated. I need to convince a builder of this, does anyone have any experience of this issue please?

[pawncob]

It's boring but you have to read it all:

http://customs.hmrc.gov.uk/channelsPort ... P144_10603

[les35]

I have spoken to a number of builders about this type of work. Some are very comfortable, having had experience themselves. Others are definitely not comfortable, fearing investigation from the VAT-man! The issue is that it is the builder's VAT Return that is potentially wrong!
Open up a dialogue with him, obtain detailed Schedule of Works, and agree the liability of the work. Some may be repair and maintenance, so you may need to do an apportionment. In some cases, I re-word the HMRC zero rating certificate, so that the builder has something formal in his VAT file.

[saharwood]

Hi there

Customs can argue that zero-rating can only apply to approved alterations to the main listed building, not to an outbuilding or other structure in its curtilage. Do the outbuildings have their own listing and how old are they (i.e. pre 1948)?

Please also note the 5% VAT relief may also apply here (to non Zero rated elements).

Regards

Scott

[alfa85]

Hi Scott

The buildings are approx 1780 and are part of a listed curtilage and not a listing in their own right.

So if it is vatable would it be 5%?

[les35]

It does look like the 5% rate would work, rather than 0%.
However it does depend on the wording of Planning Permissions, Listed Building Consents, Schedule of Works, etc.
The 5% rate is not automatic, and does have its own conditions, although they are less strict than apply for zero rating.

[davebrownvat]

The key to the answer will be found in the planning permission and/or the listed building consent. Is there a restrictive condition, such that the building shall only have "ancillary use" in connection with the main property? If yes, then there is no VAT relief at all.

The only time a curtilage building will get VAT relief is if it is, or will become a dwelling in its own right. A dwelling (as defined) is one where "the separate use, or disposal of the dwelling is not prohibited by the term of any covenant, statutory planning consent or similar provision". Ask yourself, could that building be sold off tomorrow, separate from the main house? If it can't, then it's unlikely that there will be any VAT relief. If it could, then possibly 0% and 5% might apply.

For completeness, alterations to a curtilage garage could benefit from VAT relief, but that's another story..

davebrownvat