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HM Revenue and Customs Brief 26/10

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HM Revenue and Customs -Tax Authorities

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Issued 21 June 2010

VAT: Changes to the application of the zero rate to new buildings intended to be used for a relevant charitable purpose

In Revenue & Customs Brief 39/09, we announced the ‘charitable buildings’ concession (ESC 3.29) would be withdrawn on 1 July 2010.

The purpose of this Brief is to remind charities of this withdrawal. Any charity wishing to make use of the concession before 1 July 2010 must issue the necessary certificate before that date (late certificates will not be permitted) and by 1 January 2011, either:

  • the building must have been constructed to a point above foundation level; or
  • the charity must be in occupation of the building if it is being acquired or leased

If you fail to issue the certificate in time or do not meet these conditions, you will not be eligible to use ESC 3.29 to secure zero-rating for your building.

However, charities, and those who use buildings solely for a relevant residential purpose, may still acquire or construct new buildings zero-rated for VAT providing they are able to demonstrate that the building concerned is intended to be used 95 per cent or more for a relevant residential or relevant charitable purpose. Any method can be used to measure qualifying use, provided that it is fair.

In VAT Information Sheet 08/09, we promised to consult with charity representative bodies and prepare guidance to assist charities in identifying methods that they could consider using. Following consultation with the Charity Taxation Group (CTG), the British Universities Finance Directors’ Group (BUFDG) and the Charity Finance Directors’ Group (CFDG), we have now prepared that guidance and it can be found in VAT Information Sheet 13/10.

Further information

If you are still not sure that the building you are constructing, purchasing or leasing qualifies for the zero rate or not, you can phone our Charity Helpline on Tel 0845 302 0203.


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© Crown Copyright 2010.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.



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Article Published/Sorted/Amended on Scopulus 2010-07-01 17:28:02 in Tax Articles

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