Zero-rating the sale or grant of a long lease in a protected building

By Tolley

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

  • Zero-rating the sale or grant of a long lease in a protected building
  • VAT treatment effective from 1 October 2012
  • Transitional relief
  • VAT treatment effective before 1 October 2012
  • Land
  • Mixed use developments

This guidance note provides an overview of the VAT treatment of the sale or grant of a long lease in a protected building. Please note that Scotland has different rules and this guidance notes does not cover supplies taking place within Scotland.

VAT treatment effective from 1 October 2012

The VAT treatment was amended with effect from 1 October 2012. The grant of a major interest in a substantially reconstructed protected building can no longer be zero-rated where the zero-rating was obtained because 60% of the cost of the work relates to approved alteration works.

Notice 708 ; VCONST10000; VATA 1994, Sch 8, Group 6

Zero-rating will still apply to the first grant of a major interest of a substantially reconstructed building that has been reconstructed from a shell. The business will need to ensure that they satisfy the ‘total gutting’ test explained below.

Condition 1 – protected building

A protected building is one of the following:

  • a listed building included in the statutory list of buildings of special architectural or historic interest prepared by the Secretary of State for National Heritage in England (there are Scottish and Northern Irish equivalents). If there are buildings in the curtilage of the listed building, and they have formed part of the land since before 1 July 1948, they will also be treated as a listed building as well. Unlisted buildings in conservation areas or buildings included on a local authority non-statutory list (used to be known as grade III) are not protected buildings from a VAT perspective.
  • a scheduled monument included in the statutory schedule of monuments of national importance as defined in the Ancient Monuments and Archaeological Areas Act 1979 (subscription sensitive) or the Historic Monuments and

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