VAT and building works (1)
Following the Budget on 21 March, the government issued a consultation document with the apparently harmless title VAT: Addressing Borderline Anomalies. The proposals contained in that document amounted to a withdrawal of a zero-rating in a number of cases, among them the infamous ‘Pasty Tax’ and the zero-rating for ‘Approved Alterations’ to listed buildings. As noted in VAT and alterations to listed buildings , the Government have now modified their proposals in relation to listed buildings, in those cases where the property owner had made a start on a project by applying for Listed Building Consent before Budget Day, 21 March 2012. However, even where zero-rating is not available, a reduced rate of VAT (5%) can apply to work adapting buildings (listed or not) for residential use, and zero-rating can apply to new construction of residential property. A trap that will await owners of listed buildings and other properties seeking to take advantage of the remaining zero and reduced rates has been highlighted in Holden v HMRC  UKFTT 357 (TC).
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Jul 31 2012