-
VAT on Listed Buildings – An Opportunity for Reform
The recent proposed budget changes to the zero Vat rating on Listed Buildings announced in the budget, and as previously commented on, could be an opportunity for reform. HMRC are currently consulting on addressing the anomalies that exist in the current system. This consultation period is open until the 4th May 2012 and I believe this could be the time to address the anomalies and reform the current system to address the issues within the area of work to Listed Buildings.
I have already responded to this request, and this is the response I have sent to HMRC:
“The current system of the Zero rating to approved alteration appears to encourage the alterations to listed buildings over that of a repair or maintenance. Whilst the system of an Approval ensures that work is well monitored, to suit the level of building and type of work, by the Local Authorities and Statutory Bodies, it is generally works such as extensions that are less likely to cause damage to the existing historic fabric of the building, except where connecting. Owners of Historic buildings have little in the way of an incentive to undertake essential repairs to ensure the long term stability and viability of the historic building. A far cry from some European systems, such as the French where tax reliefs are given to owners undertaking works or greater subsidies, however, this system still brings drawbacks as the government tends to limit the number of listings because of the financial burdens.
I agree that are a number anomalies within the current system, it seems unfair that the owner of a listed building can extend a residential property with the benefit of a zero rated VAT, whereas non listed residential properties do not get the same benefit. This review offers a great opportunity to look at the system and address the protection and incentive options and issues.
In my experience it is the insertion of services and poor repairs that result in the most damage to the historic fabric and it is these areas that require greater supervision by the statutory bodies. If a system was introduced that offered relief to the repairs and maintenance, it would firstly encourage maintenance by owners and by having them as approved repairs etc it encourages an application to the Local Authority and thus ensuring monitoring and protection of the works.
One further discussion point is a stimulus for development and encouragement to ensure long term viability and sustainability of our historic buildings. This is often by conversion or alternative use. However, I believe that these areas are covered elsewhere within the current system, with conversion to residential, where was 10 years prior not residential, already receives a zero rate, or a vacant property of 2 years plus receiving a reduced rate, and therefor still continue to be an encouragement to undertake this type of project.
The system needs to ensure a monitoring of the works undertaken whilst offering an incentive to maintain, I believe that the shifting of the zero rate to approved repairs and maintenance encourages this.”
I believe that this really is the time to use the system to address the issues that exist to ensure better controls and incentives in the right areas.
I would welcome any comments that you may have on this issue, please email me, or contact the HMRC directly with your thoughts.
