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HMRC internal manual

VAT Construction

HM Revenue & Customs
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Zero-rating the ‘approved alteration’ of a ‘protected building’: ‘alterations’ and ‘repair or maintenance’: classifying the work

A common misunderstanding is that works can only be categorised as either ‘alterations’ or ‘repair or maintenance’. This is wrong. They can be neither or they can be both; they are not mutually exclusive terms. There is a degree of overlap between the terms.

To be an ‘approved alteration’, a set of works must, amongst other things, be an alteration of a building that is not work of repair and maintenance (VCONST08470).

To be able to properly classify a set of works, the distinction between the concept of ‘alteration’ and that of ‘repair or maintenance’ needs to be understood. The Tribunal in S H and V S Kain (VTD 12331) has explained the broad distinction as follows:

…the [concept of alteration] looks at what actually happens, whereas the [concept of repair and maintenance] actually looks at what is done and why it is done.

When considering whether an alteration is also work of ‘repair or maintenance’, you should bear in mind that the Courts and Tribunals regularly:

  • reject the idea that, if the work is that of replacement or improvement, it can never be ‘repair or maintenance’ (VCONST08490)
  • accept that if the work has the purpose of remedying an existing defect in the building or preventing a future defect from developing, it might not be work of ‘repair or maintenance’ (VCONST08490).