Another fine VAT mess?

As an Engineer the details of VAT have never much interested me, until I read a post by Stephen Mundy of Galliford Try on the LinkedIn “South West and South Wales Construction and Property Network” Group.  In summary Stephen draws attention to another VAT problem caused by the last budget, to go along with Pasties and Static Caravans.  The proposed measure would see VAT relief removed from approved work to heritage buildings.  Further reading can be found at:

http://ihbconline.co.uk/newsachive/?p=4221

http://www.theheritagealliance.org.uk/tag/vat/

http://www.architectsjournal.co.uk/news/daily-news/budget-2012-listed-buildings-vat-relief-scrapped/8628264.article

This reveals the Government’s reason for removing the tax relief was based on flawed research, from which it concluded that removing the tax break would prevent millionaires from claiming the tax relief for installing swimming pools in listed buildings.  A more rigorous analysis of the impact of the changes identifies essential works to listed buildings, required to bring them back into use (such as disabled access) will be the major victim.  A few relevant facts (from an open letter in the Times, 14 June 2012, to the Chancellor from a group of organisations including the Federation of Master Builders, the Historic Houses Association, National Home Improvement Council, the Institute of Historic Building Conservation and the Countryside Alliance):

  • The Government’s research was undertaken on 105 cases out of 30,000 annual Listed Building Consents.
  • An analysis of 12,049 recent applications for listed building consent only 34 applications were for swimming pools and less than half of these had any chance of qualifying for the VAT relief.
  • 50% of people who live in listed buildings are in socio-economic groups C1, C2, D and E
  • Places of worship will be exempt, but not community centres, town halls, village halls or privately owned listed buildings.

The Institute of Historic Building Conservation (IHBC) website identifies construction work on existing fabric now accounts for about half of the construction sector economy.  Reusing rather than building from new is a basic tenant of a sustainable economy.  So it can also be argued, as well as building its case on a false premise the Government’s sustainability credentials are also undermined by the proposed removal of tax relief.

The conclusion must be that the proposed removal of relief may bring in further tax revenues, but is unlikely to affect the super-rich to any great extent, but is likely to reduce essential net spending on construction and hence hit construction jobs. All of which sounds like a repeat of the arguments against the initial budget proposal to put 20% VAT on Pasties and Static Caravans.

An e-petition “Save our heritage: say no to VAT on work on listed buildings” can be found at: http://epetitions.direct.gov.uk/petitions/32056?goback=%2Egmp_3896206%2Egde_3896206_member_124718133.  This is due to run until 27 June.

For those who feel that they would like to do more to oppose the proposal, more information can be found at: http://www.theheritagealliance.org.uk/2012/04/17/vat-2012-campaign-toolkit/.

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