IHBC: Heritage ‘VAT raid’ damages heritage, growth & jobs

The Institute of Historic Building Conservation (IHBC) has condemned the withdrawal of VAT relief for key heritage construction works, saying it will undermine the future improvement of many of the UK’s listed buildings while threatening much-needed growth, especially in construction and tourism.

The IHBC has submitted its response to the HMRC’s removal of VAT relief on key historic building work – the so-called ‘heritage VAT raid’ – announced in the recent Budget. The ‘VAT raid’ was portrayed in the Budget as a response to ‘anomalies’ in taxation. This has been rejected by the IHBC.

As work on existing fabric now accounts for about half of the construction sector economy, the alignment of VAT across repair and new build would be much simpler to operate. Also the new VAT raid will threaten important heritage improvement works, and so undermine growth in key sectors such as tourism and construction.

Jo Evans, IHBC Chair, said: ‘A huge cross-section of those distressed by the impact of the proposals met with the Exchequer on the 17th May, and made the case against the proposals very forcefully. I think it’s fair to say that while government is open to discussion on transitional arrangements just now, it is not considering the kind of U-turn we all want. It’s early days though, and we will all be keeping up pressure on the Chancellor to revisit these highly damaging changes!’

‘English Heritage, the Scottish Government and other major interests such as university bodies also have added their weight to the case against the changes. And as everyone will push for the same special recognition that the Church of England has managed to secure for places of worship, it will be simplest to abandon the current proposals en masse’.

Seán O’Reilly, IHBC Director, said: ‘This policy tries to present a backward step in fiscal planning as a ‘clarification’ in taxation. In fact greater clarity would be achieved if repairs, maintenance & improvement had the same VAT relief as new build. As work on existing buildings now accounts for about 50% of the construction industry, the tax divide between new build and improvement is entirely artificial.’

‘Builders, environmentalists, professionals, heritage experts and quality developers are all absolutely clear that local jobs, low-carbon development, and the future of our built heritage would all benefit from a simplification of the tax system. However that simplification should encourage care through improvement at least as much as it promotes replacement through new build!’

The IHBC response urges the Government not to implement the plan, and instead help the future of the UK’s economy and heritage, by:

• improving the prospects for heritage outcomes in the national interest in line with Government policy by reducing the VAT rate for the maintenance of listed buildings;

• introducing a low unified 5% VAT rate for all works to listed buildings;

• allowing a longer timescale for the introduction of any changes so that projects in progress are not adversely affected.

The IHBC is also a signatory to the ‘Cut the VAT’ campaign response to the VAT-raid consultation, led by the Federation of Master Builders (FMB); the response from the Heritage Alliance, the link body for voluntary sector interests in England’s heritage third sector; and the response from Built Environment Forum Scotland, Scotland’s built and historic environment link body.

See the IHBC’s response to this and other consultations at: LINK

See the ‘Cut the VAT’ Campaigns case for reducing VAT at: LINK

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