V16.966 Calculating qualifying use for a charitable or a communal residential building
Information Sheet 13/10, June 2010
In June 2009, HM Revenue & Customs (HMRC) announced the withdrawal of Extra Statutory Concession (ESC) 3.29 (the “90 per cent” concession) with effect from 1 July 2010 and a change in its interpretation of the term “solely” as used in the phrase “intended for use solely for a relevant residential or a relevant charitable purpose”. HMRC now consider that the term “solely” can credibly include a de minimis. While de minimis needs to be determined on a case by case basis, with effect from 1 July 2009, HMRC accepts that the “solely” requirement is met if a building is intended for use 95 per cent for either or both of those qualifying purposes by application of its collection and management powers.
This change of interpretation is restricted to the zero rate for the construction of new buildings intended for use for a relevant charitable and/or relevant residential purpose, the zero rate for works to listed buildings intended for similar uses and the “change of use” provisions.
The purpose of this guidance is to assist in determining whether a building is intended to be used 95 per cent for a qualifying purpose.
The definitions of the terms “relevant residential purpose” and “relevant charitable purpose” can be found at Appendix A.
ESC 3.29 can be found at Appendix B.
Please note that on or before 30 June 2010, a charity can use either ESC 3.29 or the new interpretation of