Value Added Tax

Construction ― conversion, reconstruction and alteration of existing buildings

Produced by Tolley
  • 22 Dec 2021 18:46

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Construction ― conversion, reconstruction and alteration of existing buildings
  • What is an existing building?
  • When has a building been demolished completely to ground level?
  • What kind of evidence is required for the retention of façades?
  • What happens when an existing building is incorporated into a new, much bigger structure?
  • What is meant by conversion, reconstruction and alteration?
  • What does this practically mean for zero-rating works on existing buildings?
  • Practical points ― conversion, reconstruction and alteration of existing buildings

Construction ― conversion, reconstruction and alteration of existing buildings

This guidance note examines the exclusion from the zero-rating for construction services that applies to the following kinds of works performed on existing buildings:

  1. conversion

  2. reconstruction

  3. alteration

VATA 1994, Sch 8, Group 5, Note 16(a)

This should be read alongside the Construction ― zero-rating of construction services guidance note which sets out the scope of zero-rating for construction services.

For details of reduced-rating for certain conversion and renovation works, see the following guidance notes:

  1. Conversion ― reduced-rating conversions to different residential use

  2. Renovations and alterations ― reduced-rating works on empty homes

In-depth commentary on the conversion, reconstruction and alteration of existing buildings can be found in De Voil Indirect Tax Service V4.232H.

What is an existing building?

For an outline of the meaning of ‘building’ in the context of the zero-rating for construction services, see the Construction ― zero-rating of construction services guidance note.

A building only ceases to exist when either:

  1. it is demolished completely to ground level, or

  2. the part remaining above ground level consists of:

    1. no more than a single façade which has to be retained as a condition of statutory planning consent or similar permission

    2. for corner sites, no more than a double façade which has to be retained as a condition of statutory planning consent or similar permission

VATA 1994, Sch 8, Group 5, Note 18

Therefore, if these conditions are not satisfied, a building will continue to exist. This means that any works performed will be performed on an existing building. This applies even

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