Covid-19: VAT change of use of relevant charitable or relevant residential buildings

Charities and businesses which have temporarily changed the way in which their premises are used during the Covid-19 crisis may be at risk of incurring an unexpected VAT charge under the change of use provisions.

Dated: 23 June 2020 Author: Terri Bruce, Director of Indirect Tax for SMEs and Not for Profits

A VAT cost could be incurred if the use of the building no longer meets the requirements for zero-rating.  This could affect relevant residential or relevant charitable buildings which were completed after 1 March 2011.

HMRC has updated Notice 708 to include a paragraph which states: “If the use of a certificated building changes or the building is disposed of, as a direct result of coronavirus (COVID-19), and a self-supply charge is due, you should contact HMRC through your customer compliance manager or the charities compliance team by email:”.

Charities and businesses which may be affected by the above are urged to be cautious and consider their position.

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