For a private individual, charity or other body that cannot recover input tax, this represents a significant additional cost.

In contrast, approved alterations to a protected building are zero-rated. Each part of this definition requires careful consideration, as the rules are complicated and more restrictive than generally realised. Numerous cases have ended up before the Tribunals and Courts right up to the present day.

Other works, including repairs and maintenance, are excluded, although in some cases they may qualify for the lower rate of 5%.

Protected-Buildings
A protected building is:

• a listed building or scheduled monument and
• designed as a dwelling or number of dwellings or
• intended for use solely for a relevant residential (RRP) or charitable purpose (REP).

A dwelling consists of self-contained living accommodation where there is no provision for internal access to any other dwelling, and separate use or disposal is not prohibited.

An RRP building is one that is used for various types of communal living accommodation, such as student halls of residence. An RCP building is one that it is used by a charity for its non-business activities or as a Village Hall. The works must be supplied to the end user.

Approved Alterations
An approved alteration is one that has and requires listed building consent. Repair and maintenance is specifically excluded but that does not mean that all works not in this category are alterations.

The main points to be considered are:

• whether the work is to the fabric of the building
• the impact of the work on the appearance of the building
• why the work is being done

In simple terms work will qualify if it is to the fabric of the building, changes its appearance in some way that is not trivial and is done for the sake of alteration rather than to preserve or repair the building.

There is a substantial amount of case law on the subject and the answer will inevitably depend on the facts of each particular case. Customs Notice 708 (July 2002) gives some examples of items that they classify as alteration or repair.

Even if the works are an alteration Customs may argue that if there is no, or only a minor, change in appearance, they did not require listed building consent.

Professional fees of Architects and other consultants will always be standard-rated as will the supply of carpets and other items, which are not “building materials”.

Subsidiary Buildings
The position of subsidiary buildings is even more complicated. The works may qualify if the building is a protected building in its own right or if it is a garage occupied with a protected dwelling that was constructed at the same time as the dwelling or physically attached to it.
Alterations to an outbuilding constructed within the grounds of a listed building before July 1948 require listed building consent as an alteration to the main listed building.

How We Can Help
We can help with all issues relating to VAT and listed buildings, from early advice for budget purposes and apportionment of building contract costs to negotiation and agreement with Customs.