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HMRC internal manual

VAT Construction

Changing the use or disposing of certificated buildings - buildings completed on or after 1 March 2011: other points to note


No ‘change in use’ charge is due if a zero-rated qualifying building is demolished to ground level within 10 years of completion.

Sale of property

If the entire interest held in a qualifying building is sold to another person, whether or not that person intends to use the building solely for a qualifying use, a change in use charge is due on the sale.

The law was drafted this way as the only person who can pay a ‘change in use’ charge is the person who received the zero rate supply. Therefore, if a charity had built a qualifying building and then one year later sold that building, they would remain responsible for any ‘change in use’ charge for the next nine years.

By making the ‘change in use’ charge payable on disposal of the entire interest held (normally the freehold), this removes charities from the administrative and financial burden of having to monitor the use of buildings that they otherwise have no legal interest (for land law purposes) in.

Transfer of a going concern

There are no special rules for the transfer of a going concern (TOGC) involving qualifying buildings. A TOGC can only apply to a transfer of a business and so wouldn’t apply to charitable non-business activities or to use for a non-business relevant residential purpose.