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HM Revenue and Customs Brief 05/11


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Issued 24 January 2011

VAT: simplification of the 'change in use' provisions for buildings zero-rated because they were intended to be used for a relevant residential and relevant charitable purpose

This Brief announces a simplification of the ‘change in use’ provisions (Paragraphs 35 to 37 of Part 2 of Schedule 10 to the Value Added Tax Act 1994) by Value Added Tax (Buildings and Land) Order 2011 (SI 86/2011).

With effect from 1 March 2011, there will no longer be two adjustment mechanisms (each with its own rules on how to calculate and apply a tax charge) to apply to the two sets of circumstances where a ‘change in use’ occurs.

Instead, there will be a single adjustment mechanism to be applied in all circumstances. It will be based on the:

  • amount of VAT that would have been chargeable on the original supply (or supplies) had the building in question not been eligible for the zero rate;
  • proportion of the building that is affected by the change in use,and
  • number of complete months that the building has been used solely for a qualifying purpose prior to the change in use.

These changes have been made following a consultation, announced in Revenue & Customs Brief 49/10, on proposals to simplify the provisions.

Further information on whether a 'change in use' has occurred and how to calculate the tax charge can be found in VAT Information Sheet 04/11, which will be published shortly.

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Article Published/Sorted/Amended on Scopulus 2011-01-26 14:13:18 in Tax Articles

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