HM Revenue and Customs Brief 26/10
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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concession (ESC 3.29) would be withdrawn on 1 July 2010.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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