The Heritage Alliance’s Chairman Loyd Grossman has written to the Chancellor of the Exchequer calling for a complete reversal of the Budget measure removing the zero VAT rating on approved alterations to listed buildings.
This measure appears in the 2012 Budget under the heading ‘VAT: addressing borderline anomalies’. Due to come into force on 1 October 2012, it would add 20 per cent to the cost of alterations approved under listed building consent.
The Government alleges that “the majority of the work covered by the relief consists of extension work which is not necessary for heritage purposes” and that “the current rules give a perverse incentive for change as opposed to repair”.
The Alliance argues:
- The measure is too blunt a tool to prevent unnecessary alterations, which are in any case controlled by the need for Listed Building Consent.
- It will act as a sharp disincentive to just the sort of sympathetic adaptation of historic buildings that is so often necessary to secure a viable use for these buildings for the future.
- This latest proposal to withdraw the zero rate for alterations to listed buildings will have a negative impact on smaller property owners and businesses.
- The measure threatens to undercut the positive initiatives taken in the Penfold Review and the newly published National Planning Policy Framework to encourage the economic use of historic buildings and to realise the potential of these buildings to support economic growth.
Since 1984 VAT has been levied at the full rate on repairs and maintenance across our entire building stock, compared with a zero rate on new build. This zero rating on approved alterations is a small acknowledgement of the national importance of our listed buildings, which comprise around 2.5 per cent of our built environment. Most importantly, the zero rating is extremely precious. Once the zero rating for alterations is lost, there is no legal device for reintroducing any other form of zero rating, so once lost it’s lost for ever.
It will affect dwellings, residential buildings and buildings used by charities for non-business purposes such as a place of worship or as a village hall or similar. The impact on private owners, community groups and parishioners is wide reaching, affecting our national heritage. The Alliance does not consider any one group should look for special exemption.
The Alliance calls on the Government to retain the zero rate for approved alterations to all listed buildings regardless of building type or ownership.
In addition to retaining this important zero rating on alterations, the Alliance will continue to campaign for a 5 per cent rate for repairs, maintenance and improvement to all residential property, as allowed under the 2009 EU Directive. The Alliance will continue to campaign in the UK and in Europe to achieve its long term objective – namely an EU option to remove the 20 per cent rate from repairs and maintenance work on all historic buildings.
The Heritage Alliance: 12 April 2012