The Value Added Tax (Construction of Buildings) Order 2002

Explanatory Note

(This note is not part of the Order)

This Order amends Note (17) to Group 5 of Schedule 8 to the Value Added Tax Act 1994.

Group 5 of Schedule 8 applies the zero rate of VAT to various supplies relating to buildings, including certain supplies in connection with the construction of a building that is intended for use solely for a relevant charitable purpose. Note (16) to the Group describes building works which are not to be regarded as the construction of a building for this purpose. Paragraph (c) excludes the construction of an annexe to an existing building, but subject to Note (17). Note (17) describes the conditions under which the construction of an annexe to an existing building can be regarded as the construction of a building. One of the conditions is that the annexe is intended for use solely for a relevant charitable purpose.

This Order amends that condition in Note (17) so that, providing the other conditions in the Note are met, the construction of an annexe can be regarded as the construction of a building when only part of it is intended to be used solely for a relevant charitable purpose. In conjunction with Note (10), which provides for apportionment of supplies between the zero and standard rates, this will allow zero-rating for the appropriate supplies made in connection with that part of the annexe.