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HMRC internal manual

VAT Construction

From
HM Revenue & Customs
Updated
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Relevant charitable purpose concession (pre-1 July 2010 only): time-based method (parts of buildings)

The method based on time could only be applied to parts of a building with our permission. It was an alternative to the time based, floor space and head count methods for the entire building and wasn’t be used in conjunction with them.

Step Action
   
## Step 1 Select a representative period.
Note: The representative period over which the use is measured isn’t prescribed and any reasonable representative period may be used.    
  ## Step 2 Determine the amount of time that the part of the building is (or the parts of the building are) intended to be used solely for a relevant charitable purpose during that representative period.
  ## Step 3 Determine the total amount of time that the part of the building is (or the parts of the building are) available for use during that representative period.
Note: The ‘total time the part of the building is (or parts of the building are) available for use’ is the total opening hours of the part (or parts) of the building during the representative period.    
  ## Step 4 Divide the amount of time determined at by the amount of time determined at and multiply by 100.
  ## Step 5 If percentage calculated at is greater than 90 per cent, any non-qualifying use can be ignored.

Note: The parts under consideration could be determined by any method that was fair and reasonable. However, they had to be ‘identifiable’.

VCONST19500 provides guidance on how to treat mixed-use parts.

Example 

A charity intends to construct an office block. One specific area will be used solely for business purposes whilst the remainder of the building will be used solely for relevant charitable purposes. The building will be unable to meet the concession under the floor space method.

Of the 100 people to be employed in the building, 12 will be employed in that specific area partially on business activities whilst the remaining 88 will be employed elsewhere in the building solely on relevant charitable activities. The building will be unable to apply the concession under the head count method because qualifying use will be 88 per cent.

However, those 12 employees to be employed on business activities will only do so every Friday morning for two hours. The rest of the time (36 hours) those staff will be involved on relevant charitable activities.

The percentage qualifying use is 36 divided by 38 - that is, 94.7 per cent. The building will qualify under the concession using this method and a certificate can be issued.