VAT Bill on new building
Childs Trust asked 2 months ago
My little village parish church has just built a new toilet (outside in the graveyard in a wooden hut type construction) and refurbished the vestry to include a new kitchen. I’m quite new there so don’t know the full story but for whatever reason they believed (or were told) they would be able to reclaim the VAT on the build. They have now been told this is not the case and have a bill for £12,000 to pay.
Can anyone point me in any direction of any help/advice or funding that might be available to assist them with this bill?
The congregation is very small in number. They want to make the facilities more ‘useable’ and engage in outreach in the village but I fear this bill is going to mean the next few years are just spent fundraising to pay off this debt.
Any pointers greatly appreciated.
Can anyone point me in any direction of any help/advice or funding that might be available to assist them with this bill?
The congregation is very small in number. They want to make the facilities more ‘useable’ and engage in outreach in the village but I fear this bill is going to mean the next few years are just spent fundraising to pay off this debt.
Any pointers greatly appreciated.
2 Answers
The Partistamen Charity answered 1 month ago
The rules about VAT on charitable buildings are subtle and it is probably worth their while getting advice from someone who specialises in charity VAT issues.
However in general a NEW building for charitable non-business use can be zero rated for VAT and it sounds as though this should apply to the toilet building. It’s not a question of reclaiming the VAT – it’s about getting the builder to appreciate they can invoice for the work with 0% VAT on the invoice (instead of 20%). The charity (the PCC if it is an Anglican church) will need to give the builder a ‘Certificate of zero-rating’ – so they just need to send the builder an official note preferably on the church letterhead confirming that the building is for charitable non-business use. (Non-business means not generating trading income through lettings or other chargeable services.) But to do this it is vital to get the builder to invoice the toilet block separately from the vestry work.
However, refurbishing an existing vestry is clearly work on an existing building, so this would generally be subject to standard 20% VAT. Having said that, if the church is a listed building, there may be scope for the PCC to reclaim some or all of the VAT on this work under the ‘Listed Places of Worship Grant Scheme’ – see https://listed-places-of-worship-grant.dcms.gov.uk/ In general this is for repairs, rather than improvements, but often these refurbishments encompass at least some repair work.
But please treat these comments purely as pointers to issues for consideration, not as formal advice.
However in general a NEW building for charitable non-business use can be zero rated for VAT and it sounds as though this should apply to the toilet building. It’s not a question of reclaiming the VAT – it’s about getting the builder to appreciate they can invoice for the work with 0% VAT on the invoice (instead of 20%). The charity (the PCC if it is an Anglican church) will need to give the builder a ‘Certificate of zero-rating’ – so they just need to send the builder an official note preferably on the church letterhead confirming that the building is for charitable non-business use. (Non-business means not generating trading income through lettings or other chargeable services.) But to do this it is vital to get the builder to invoice the toilet block separately from the vestry work.
However, refurbishing an existing vestry is clearly work on an existing building, so this would generally be subject to standard 20% VAT. Having said that, if the church is a listed building, there may be scope for the PCC to reclaim some or all of the VAT on this work under the ‘Listed Places of Worship Grant Scheme’ – see https://listed-places-of-worship-grant.dcms.gov.uk/ In general this is for repairs, rather than improvements, but often these refurbishments encompass at least some repair work.
But please treat these comments purely as pointers to issues for consideration, not as formal advice.
Childs Trust answered 1 month ago
Thank you that’s really helpful, I will pass this on to the treasurer. Thank you for taking the time to reply.
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VAT Bill on new building
Childs Trust asked 2 months ago
My little village parish church has just built a new toilet (outside in the graveyard in a wooden hut type construction) and refurbished the vestry to include a new kitchen. I’m quite new there so don’t know the full story but for whatever reason they believed (or were told) they would be able to reclaim the VAT on the build. They have now been told this is not the case and have a bill for £12,000 to pay.
Can anyone point me in any direction of any help/advice or funding that might be available to assist them with this bill?
The congregation is very small in number. They want to make the facilities more ‘useable’ and engage in outreach in the village but I fear this bill is going to mean the next few years are just spent fundraising to pay off this debt.
Any pointers greatly appreciated.
Can anyone point me in any direction of any help/advice or funding that might be available to assist them with this bill?
The congregation is very small in number. They want to make the facilities more ‘useable’ and engage in outreach in the village but I fear this bill is going to mean the next few years are just spent fundraising to pay off this debt.
Any pointers greatly appreciated.
2 Answers
The Partistamen Charity answered 1 month ago
The rules about VAT on charitable buildings are subtle and it is probably worth their while getting advice from someone who specialises in charity VAT issues.
However in general a NEW building for charitable non-business use can be zero rated for VAT and it sounds as though this should apply to the toilet building. It’s not a question of reclaiming the VAT – it’s about getting the builder to appreciate they can invoice for the work with 0% VAT on the invoice (instead of 20%). The charity (the PCC if it is an Anglican church) will need to give the builder a ‘Certificate of zero-rating’ – so they just need to send the builder an official note preferably on the church letterhead confirming that the building is for charitable non-business use. (Non-business means not generating trading income through lettings or other chargeable services.) But to do this it is vital to get the builder to invoice the toilet block separately from the vestry work.
However, refurbishing an existing vestry is clearly work on an existing building, so this would generally be subject to standard 20% VAT. Having said that, if the church is a listed building, there may be scope for the PCC to reclaim some or all of the VAT on this work under the ‘Listed Places of Worship Grant Scheme’ – see https://listed-places-of-worship-grant.dcms.gov.uk/ In general this is for repairs, rather than improvements, but often these refurbishments encompass at least some repair work.
But please treat these comments purely as pointers to issues for consideration, not as formal advice.
However in general a NEW building for charitable non-business use can be zero rated for VAT and it sounds as though this should apply to the toilet building. It’s not a question of reclaiming the VAT – it’s about getting the builder to appreciate they can invoice for the work with 0% VAT on the invoice (instead of 20%). The charity (the PCC if it is an Anglican church) will need to give the builder a ‘Certificate of zero-rating’ – so they just need to send the builder an official note preferably on the church letterhead confirming that the building is for charitable non-business use. (Non-business means not generating trading income through lettings or other chargeable services.) But to do this it is vital to get the builder to invoice the toilet block separately from the vestry work.
However, refurbishing an existing vestry is clearly work on an existing building, so this would generally be subject to standard 20% VAT. Having said that, if the church is a listed building, there may be scope for the PCC to reclaim some or all of the VAT on this work under the ‘Listed Places of Worship Grant Scheme’ – see https://listed-places-of-worship-grant.dcms.gov.uk/ In general this is for repairs, rather than improvements, but often these refurbishments encompass at least some repair work.
But please treat these comments purely as pointers to issues for consideration, not as formal advice.
Childs Trust answered 1 month ago
Thank you that’s really helpful, I will pass this on to the treasurer. Thank you for taking the time to reply.
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