24 T H E B U I L D I N G C O N S E R VAT I O N D I R E C T O R Y 2 0 1 9 C AT H E D R A L C O MM U N I C AT I O N S VAT and Heritage Trusts IAIN MASTERTON H ERITAGE PROJECTS are, by their very nature, unique. In the last year alone, tax accountancy Chiene+Tait has advised on a variety of projects including the restoration of a railway goods shed, a Victorian gasworks, an orangery building and a medieval public house. All of these projects were exceptional in their own way, but all were primarily concerned with bringing back to life beautiful, cultural and historic buildings to ensure future generations can benefit from them. And each of them was able to benefit from early and careful consideration of its VAT position. In projects of this nature VAT is one of those issues that needs to be considered at an early stage. In particular: • will VAT be charged on the renovation works and at what rate? • and if VAT is charged, can this be recovered? Unfortunately, the answer to the first question is simple: yes, and usually at 20 per cent. Until 2012, approved renovations to listed buildings used for residential and charitable purposes qualified for zero-rating VAT which greatly helped reduce the VAT costs on projects and increased their viability, particularly those projects where conservation work predominated. This zero-rating provision is no longer available. A five per cent reduced VAT is available in a limited number of instances which may assist in mitigating VAT costs for certain conservation projects, as outlined below. These apply irrespective of whether the building is listed or not, however the standard 20 per cent VAT rate will apply to works and professional fees in most projects. The lack of VAT concessions for heritage property means that there is often only one viable option to reduce the VAT cost on capital works and ongoing costs and that is to consider registering for VAT. This brings with it increased administration, and it can also impact on the nature of the activities that take place within the renovated building. The dilapidated 18th-century Ingestre Orangery: the building qualified for VAT recovery during renovation works to convert it into a community resource centre. (Photo: Gill Broadbent, Friends of Ingestre Orangery) WORKS ELIGIBLE FOR REDUCED RATE VAT at five per cent applies to: • works associated with converting a non-residential building into residential – for example, a mill building being converted into a house or flats • works being undertaken to a residential building which has been empty for two or more years (contractors may wish to see evidence of this so it is worth obtaining proof from the housing department of the relevant local authority) • works associated with projects which result in the number of residential properties changing – for example, three existing farm cottages being converted into one or a townhouse being converted into a number of apartments. The reduced rate covers construction work and building materials. Any professional fees will still be subject to VAT at 20 per cent.