Constable VAT Consultancy LLP

HMRC have issued Revenue & Customs Brief 26/10 reminding charities that the withdrawal of the 'charitable buildings' concession (ESC 3.29 also known as the '90 per cent concession') and a change in the interpretation of the term 'solely' as used in the phrase 'intended for use solely for a relevant residential or a relevant charitable purpose' will take effect from 1 July 2010. Charities wishing to make use of the concession must issue certificates before that date and by 1 January 2011, either:

• the building must have been constructed to a point above foundation level; or
• the charity must be in occupation of the building if it is being acquired or leased.

HMRC now consider that the term 'solely' can credibly include a de minimis limit. While de minimis needs to be considered on a case by case basis, HMRC have confirmed that the 'solely' requirement will be met if a building is intended for use 95 per cent for either or both of those qualifying purposes. The change of interpretation is restricted to the zero rate for the construction of new buildings intended for use for a relevant charitable and/or relevant residential purpose, the zero rate for works to listed buildings intended for similar uses and the 'change of use' provisions.

HMRC has issued VAT Information Sheet 13/10 to assist in determining whether a building is intended to be used 95 per cent for a qualifying purpose.