Changes to VAT rules announced in last month’s Budget will affect owners and developers of listed buildings.
Owners of listed buildings have previously benefited from zero VAT rating relating to approved alterations to those buildings. George Osborne has, however, announced the removal of the zero rating, meaning that future works will be subject to VAT at the standard rate resulting in a 20% increase in the cost of works at the current rate.
The change will come into effect on 1 October 2012 although transitional arrangements will apply to contracts entered into prior to 21 March 2012.
Although the change will result in higher costs for those making alterations to listed properties it will also simplify matters, removing the distinction between an alteration and a repair to a listed property – often a source of dispute between developers and HMRC.
For more information please contact one of our property lawyers on 0845 604 2847.