VAT and the listed building – The Listed Property Owners’ Club can provide guidance relating to any relief that might be available to you as a listed property owner.
For owners of listed properties, the issue of VAT relief will be one that hits close to home. Previously, the words “VAT” and “Listed Buildings” were linked because there was a particular relief that allowed the zero rate of VAT to be applied to certain types of work. That, sadly, has now gone and there is no specific relief that can be applied to listed buildings in isolation.
In 2012, the Treasury announced the removal of zero-rating VAT on approved listed building alterations. This change meant that, generally, most future work on listed properties would be subject to VAT at the standard rate, 20%.
Transitional arrangements were put in place to protect the tax rate applied to contracts entered into before 21 March 2012 but those contracts had to be completed by 30 September 2015.
The Listed Property Owners’ Club (LPOC) created the Political Campaign for Owners since the news was announced. In the years that followed, LPOC have made significant progress having seen the formation of the All-Party Parliamentary Group (APPG) on Listed Properties which is working to lobby the government to reduce VAT for all approved work to listed buildings to 5% as well as simplification of the planning laws.
We are continuing to seek the support of policy makers and listed property owners to help bring about these changes. To keep updated on our progress, please check the Campaign for Owners news and sign up to our newsletter.
What VAT relief is still available?
Listed and non-listed dwellings are now subject to the same rules, but the good news is that there still remains a measure of VAT relief, which can be applied in certain circumstances. LPOC has an in-house VAT Adviser, Dave Brown, with over 40 years’ experience both with HMRC and as a VAT consultant. Dave is able to provide comprehensive information relating to any relief that might be available to you as a listed property owner.
Here are examples where VAT relief may be possible, all on a ‘supply and fit’ basis by VAT registered contractors:
- Conversion of a non-residential property into a dwelling.
This will apply to a typical barn conversion, or converting an office into a house; a chapel into a house; a pub into a house or similar, but it might not apply with the likes of a pub if it has a self-contained flat above.
- Where a domestic property has been empty for 2 years prior to work
This applies, as the name suggests, where a house has been empty for two years prior to a contractor starting building works. The empty period has to be evidenced, preferably with something from the local authority – please remember that, ultimately the builder may have to convince a sceptical VAT man! There is a very small window of opportunity available where a house has been empty for two years, but the owner moves in before work starts. An additional condition attached to this is that the work has to be finished within one year of the owner purchasing the property.
- A ‘changed number’ conversion.
As the name suggests, this is where the number of residential units within a building has changed, either up or down. For instance, splitting a house into flats, or vice versa.
- Installation of energy saving
From draught-stripping windows, to loft or wall insulation; to full-blown solar/wind power installations and air/ground source heat pumps, the 5% VAT rate applies – but only on a supply and fit basis. One point to note is that if the insulation is part of a bigger job, the VAT rate applicable to that job will over-ride the 5% rate. For instance, a roof replacement would be liable to VAT at 20% in full, even if it was insulated at the same time.
- Mobility aids for the over 60s
This applies to certain types of work designed to assist elderly, less able individuals and includes the following: grab rails, ramps, stair lifts, bath lifts and walk-in baths or showers with seats.
In addition to the last item, 0% VAT applies to certain types of work for the disabled – please contact us on 01795 844939 for more details.
Members of LPOC have free access to telephone advice from VAT adviser Dave Brown to gain further information and advice on the above scenarios, to clarify whether VAT relief may be possible. Dave can also guide members through the process of reclaiming VAT from HMRC, where appropriate. The LPOC Owner’s Logbook provides further information on the “DIY Housebuilders Scheme” and how this could be appropriate to certain listed building projects. If you would like to become a member of the Club, call us on 01795 844939 or click here to join today.
CASE STUDY – Listed property owner successfully claims back over £17,000 in VAT thanks to advice provided by The Listed Property Owners’ Club
One particular owner found good fortune by talking to LPOC’s VAT Adviser Dave Brown at the annual Listed Property Show; whereby their conversation at the February 2017 event led him to receive a refund of over £17,000 from HMRC.
The owner had purchased a dilapidated 1413 hall house in Maidstone Kent, which was a failed pub at the time, and he then converted it to a single domestic dwelling. The owner had managed to work his way through two VAT hurdles, one of which was avoiding VAT on the purchase price as the pub was being converted from commercial to residential use and then, with the help of an accountant’s report, he was able to reduce the VAT charges down to 5% on the majority of the reconstruction work rather than the standard rate.
Then the owner spoke to Dave at The Listed Property Show who introduced a third step the owner was not aware of – the ability to reclaim the VAT that he had spent, from HMRC. With the exception of certain items that are always liable to VAT (white goods, architect’s fees) this three year project was completed without incurring VAT, resulting in a refund from HMRC totalling over £17,000.
The owner says, “Dave’s advice and encouragement were crucial in obtaining a successful result. I did not know this third VAT step existed until I met him.”
If you have a questions regarding VAT and would like to see how we can help please get in touch today by filling out a contact form or calling on 01795 844939.