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HMRC internal manual

VAT Construction

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‘Approved alteration’ of a ‘protected building’ (changes introduced on 1 October 2012): Transitional relief from 1 October 2012 to 30 September 2015

A transitional relief, to mitigate the impact, will apply until 30 September 2015, as detailed below.

Approved alterations - rules from 1 October 2012

The zero rate for approved alterations to protected buildings (see VCONST08200) and associated building materials has been withdrawn with effect from 1 October 2012 and are now standard-rated unless they

  • qualify for continued zero-rating under the transitional rules or
  • qualify for zero- or reduced-rating under another part of the VAT law

The first grant of a major interest in a substantially reconstructed protected building - rules from 1 October 2012

The zero rate for the first grant of a major interest in a substantially reconstructed protected building will be restricted from 1 October 2012. From that date the 3/5ths test will be withdrawn (see above) and zero-rating will be limited to the first grant of a major interest in a protected building substantially reconstructed from a shell (more information on this can be found in Section 10 of Notice 708).

Note: An anti-forestalling charge was introduced, under Schedule 27 of the Finance Act 2012, to prevent suppliers avoiding the effect of the 1 October 2012 changes by bringing forward the time of supply. This applied where

  • The supplier received payment for the supply after 20 March 2012 and before 1 October 2012; and
  • the supplies of alteration services were carried out, or the building materials incorporated into a building, on or after 1 October 2012.
  • the supplies did not qualify for transitional relief (see paragraph 3.2 below).

In the event that a supply was made under these circumstances an anti forestalling charge would be due at a rate equal to the standard rate of VAT and would have been due on 1 October 2012.