More VAT On Property? New Legislation Affecting Charities

New legislation could impose more VAT on charities that sell, assign or let buildings.

Overview

A charity using a building completed on or after 1st March 2011 for a relevant charitablepurpose ("RCP") that previously received a zero-rated supply of an interest in the buildingmay be required to charge itself a substantial amount of VAT if it sells, assigns or lets thebuilding. This is due to the Value Added Tax (Buildings and Land) Order 2011 (SI 2011 /86), which amends Schedule 10 Value Added Tax Act 1994 ("VATA").

Other changes made by the new legislation less relevant to charities are not consideredhere. For background, see the "Property VAT traps" article in the December 2010 issue.