-
Budget 2012 and VAT on Listed Buildings
During the 2012 Budget the Chancellor announced that the VAT exemption to Listed Buildings was to be removed. In the past this exemption applied to Approved Alterations, with the word Approved Alterations being the key determination on whether VAT was applied. The determination on the VAT rating always fell to a decision by HMRC. A common approach to reduce the risk of a VAT rate being applied after construction work had been completed and paid for, owners, agents and contractors would seek the relative safety of a Planning Application and Listed Building Approval to meet the criteria of Approved Alteration.
This often resulted in applications being made to the Local Authority for alteration works to ensure that the VAT rate was zero. The zero rating was often extended to repairs as approval would be sought to cover the repair as an alteration. With no incentive for a reduction in VAT liability will this result in fewer applications to the Local Authority and therefore a reduction in the amount of work that is overseen and approved?
I believe that often alteration work and repairs are most likely to lead to damage to the historic fabric of a building, due to the increased tendency for removing elements of the building or for undertaking work that alters the way a building is read. It is this type of work that requires the greatest supervision by Local Authorities. With the removal of any incentive for the custodian of a Listed Building to apply for approval from the Local Authority there is an increased risk in unauthorised works.
The introduction of VAT is a revenue stream to the Government and the VAT liabilities to Listed Buildings is full of anomalies, key issues that need to be addressed, however, VAT on listed buildings goes wider than this and offers protection measures to the work undertaken and incentives to Listed Building owners to undertake works to ensure the long term sustainability and viability of these buildings. A far more important consideration than income revenues.
