VAT on listed buildings opposes repair

Over the last 25 years the number of listed buildings has increased five fold and according to VAT experts at Cowgill Holloway, owners of listed buildings that just repair their properties, may find it costlier than radically altering them.

Repairs to listed buildings are currently subject to the standard VAT rate of 17.5 per cent. In contrast, approved alterations to listed buildings for residential or non-business charity purposes, as well as those that are being converted to such use, are VAT-free, as long as the work is done by a VAT registered builder and with listed building consent.

Carolyn Van Hecke, Cowgill Holloway's senior VAT manager says, “The VAT liability of repairs and alterations to listed buildings is complicated and quite surprising, as you would expect the organisations that monitor these buildings to want them to be sympathetically repaired to preserve their original state instead of them being altered significantly.

“However, Her Majesty’s Revenue and Customs (HMRC) seems to be pushing people who own listed buildings into altering the building and its fittings in order to save money. Many people who own listed buildings will be unaware that they are being penalised for restoring properties to their original state and that they would be better off financially making wholesale changes to the property."

Van Hecke recommends that anyone embarking on a project of this nature should seek specialist advice at an early stage to ensure that potential VAT savings are maximised. "This is an area fraught with difficulty and the legislation contains no general guidance on the borderline between alteration or repair and maintenance," she concludes.

For more information visit www.cowgills.co.uk