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HMRC internal manual

VAT Construction

Zero-rating the ‘approved alteration’ of a ‘protected building’: is the work to a ‘protected building’: fences, walls and other external structures

Only ‘approved alterations’ to the building alone qualify for zero-rating, because the relief is limited to ‘approved alterations’ to a ‘protected building’ that remains or becomes so on completion of the works.

The House of Lords judgment in Zielinski Baker confirmed that the proper focus for zero-rating is the ‘protected building’ itself. Alterations to buildings listed because they are within the curtilage of a ‘protected building’ do not qualify for zero-rating unless they remain or become ‘protected buildings’ following the works. For example, alterations to an outbuilding to create leisure facilities for use with a listed house do not qualify for zero-rating.

The approach adopted in Zielinski Baker was applied in AC Tinsley (Ch D [2005] STC 1612) to find that the construction of a terrace that adjoined the listed house was not an alteration to a ‘protected building’. Laddie J stating:

Applying the Zielinski Baker approach to the facts in this case, although the top level of the new terrace touches the bottom of the side wall of Narborough Hall, it can be seen that the alterations were done to the garden, not to Narborough Hall. Furthermore, the work carried out in the garden left it as part of the garden which is not designed to remain or become a dwelling.

Significantly, the judge passed comment on decisions in R G Powell (t/a Anwick Agricultural Engineers) (VTD 14520) and C Mason (VTD 16250). Each involved, respectively, railings around a church and the replacement of a fence by a wall. He said of the decisions that:

The correctness of those decisions must now be seriously in doubt in view of the clarification of this area of law by the House of Lords.

The facts of each case will decide whether or not works within the grounds result in the building being altered. In general where a structure is built or altered and is something that can be seen as distinct and apart from the building itself, the works will not qualify as ‘approved alterations’ to a protected building.

Accordingly, the construction of and alteration to perimeter walls and fences, paths and drives, terraces, fountains, and so on do not qualify as approved alterations. Zero-rating will apply where and to the extent that the works are supplies in the course of an ‘approved alteration’ (VCONST08650).

In Logmoor Ltd (VTD 14733) it was held that paving, landscaping, and restitution and protection works to a moat and grounds of a listed building, known as ‘The Moat House’, were not works of alteration. The Tribunal stated:

They amounted in my view to the enhancement of the curtilage of The Moat House, rather than an alteration to it. The Moat House itself was unaffected thereby. What was undoubtedly affected was the attractiveness of the property as a whole and the quality of enjoyment thereof, but [the items] do not in my judgment qualify on that account for zero rating…