Changes to charitable building
HMRC has recently announced an important change regarding certain buildings used by charities.
Business Brief 39/09 sets out the revised treatment of buildings used by charities for non business purposes. The supply of such buildings is zero rated where the charity provides the developer with a “qualifying use” certificate. Any change of use by a Charity in the ten year period following the supply will trigger a self -supply VAT charge.
Previously HMRC allowed zero rating for such buildings where there was up to 10% business use of the building, by concession (ESC 3.29).
Following a review of this issue and recent Court decisions, HMRC now take the view that the statutory position is that a building must be used at least 95% for non business purposes to qualify for zero rating. As such the concession will be withdrawn.
A 12 month transitional period began on 1 July 2009 and during this time, charities can opt to use the concession or apply the new rules.
This change could have a huge impact on charities’ financial position. It is understood that pressure is being put on the Government to reverse this decision. However, a reversal is thought to be unlikely.
Date: 28th July, 2009
Articles from this Author
24th July, 2018
Academies Accounts Direction 2017/2018 (AAD)
9th February, 2018
Guidance for charities regarding the changes to the automatic disqualification of trustees rules
30th November, 2017
Legislative changes affecting the Charitable Incorporated Organisation (CIO)
14th November, 2017
Updated guidance for independent examiners (CC32)
Sandy Bell, Partner in Rickmansworth considers the merits of Furnished Holiday Lettings in Optima magazine… twitter.com/i/web/status/1…
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole