Commentary

V16.980 Change in use provisions

Part V16 Forms and other HMRC material

V16.980 Change in use provisions

V16.980 Change in use provisions

Information Sheet 4/11, January 2011

1 Introduction

On 24 January 2011, HM Revenue & Customs (HMRC) announced (in Revenue & Customs Brief 5/11) that it had simplified the application of the “change in use” provisions for buildings that had qualified for the zero rate of VAT because they were intended for use solely for a relevant residential or relevant charitable purpose (paragraphs 35 to 37 of Part 2 of Schedule 10 to VATA 1994) with effect from 1 March 2011.

In that brief, HMRC stated that it would provide an Information Sheet to clarify when the simplified “change of use” provisions would apply and VAT on a self-supply charge would need to be accounted for.

These simplified “change in use” provisions will only apply where:

  1.  

    —     the “change in use” took place on or after 1 March 2011

  2.  

    —     the zero-rated supply in question took place on or after 1 March 2011.

If the zero-rated supply took place before 1 March 2011, the previous “change in use” provisions will apply.

Background

New buildings that are intended to be used solely for relevant residential or relevant charitable purposes are relieved of VAT on their construction or acquisition. A building that does qualify for that relief is expected to be used solely for either or both of the qualifying purposes for a period of, at least, ten years following completion of the building.

If the building ceases to be used solely for that qualifying purpose within that ten year period or if that use decreases,

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