Save content
Have you found this content useful? Use the button above to save it to your profile.
AIA

VAT: Amendment to change of use charge for ‘charitable’ buildings

by
28th Mar 2007
Save content
Have you found this content useful? Use the button above to save it to your profile.

From 21st March HMRC will no longer enforce a self-supply charge on charities where there has been an unanticipated change of use of a zero-rated new building.

A charity is entitled to the zero-rating of the supply of:

  • a new building;
  • construction services to construct a new building;
  • a substantially reconstructed listed building;
  • an approved alteration to a listed building,
    where the building concerned will be used solely for a relevant charitable purpose.

Under ESC 3.29, a charity is entitled to ignore non-qualifying use as long as it does not exceed 10%, but there was a provision whereby the charity will be liable for a ‘change of use’ taxable self-supply charge, if the qualifying charitable use of the building falls below 90% within 10 years of the zero-rating.

This change means that any charity using the ESC to obtain zero-rating and whose non-qualifying use subsequently exceeds 10% within the 10 year adjustment period, will not be required to account for a self-supply charge. If it is apparent that, at the time that zero-rating was obtained, it was intended that non-qualifying use would exceed 10% within the 10 year adjustment period, HMRC will consider that the original supply should never have been zero-rated in the first place.

Any charity that has paid a ‘change of use’ charge in the last 3 years may be entitled to a refund. Those who are, or have been but are no longer, VAT registered can make an adjustment in accordance with Notice 700/45 (How to correct VAT errors and make adjustments or claims. Those who have never been VAT registered can apply for a refund if they have accounted for the charge.

Tags:

Replies (0)

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.