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HMRC internal manual

VAT Construction

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HM Revenue & Customs
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‘Approved alteration’ of a ‘protected building’ (changes introduced on 1 October 2012): Scope of the transitional relief

the transitional relief applies to all qualifying listed buildings.

Projects underway on 21 March 2012

The transitional rules for approved alterations may be applied subject to having evidence of an application for listed building consent made before 21 March 2012, or evidence of a written contract for the alterations in place before 21 March 2012. For the first grant of a substantially reconstructed building (meeting the 3/5 approved alterations test) the same evidence or evidence that 10 per cent of the reconstruction work was completed prior to 21 March 2012 is required.

The transitional rules do not apply where fundraising was at an advanced stage prior to 21 March 2012 (but where no listed building consent was applied for and no written contract was in place)

Where a builder has completed 10 per cent of an approved alteration on a property prior to 21 March 2012 will the work be eligible for zero-rating?

The 10 per cent rule applies only to the zero-rating of the first grant of a major interest in a substantially reconstructed property where 3/5ths of the works constitute approved alterations. The approved alterations to a property will only benefit from the transitional arrangements if either

  • It can be shown that listed building consent was applied for before 21 March 2012; or that a written contract was entered into before 21 March 2012, and that the works carried out were within the scope of the listed building consent or contract.

Determining the date of a grant of a major interest in a building for the purpose of the transitional rules for substantial reconstructions

A major interest in a building will be granted on the date of completion of the sale or transfer of title. So where the date of completion of the sale or the transfer of title occurs before 30 September 2015 then zero-rating can apply under the transitional rules where the other conditions are met.

Where a deposit is received in relation to a first grant of a major interest in a substantially reconstructed protected building qualifying for the transitional rules, then the normal tax point rules apply and the deposit can be zero-rated if paid before the end of the transitional period and the other conditions are met.