Explanatory Note
(This note is not part of the Order)
This Order replaces, in identical terms, the Value Added Tax (Construction of Buildings) Order 1987 (S.I. 1987/781) which has expired because it did not get House of Commons approval in the specified time.
Article 2 of this Order amends Notes (1A) and (2A) of Group 8 of Schedule 5 to the Value Added Tax Act 1983 (as amended) and article 3 of this Order amends article 8 of the Value Added Tax (Special Provisions) Order 1981 (as amended).
Group 8 sets out the reliefs available by way of zero-rating for the construction of buildings etc and Notes (1A) and (2A) have the effect of excluding from zero-rating supplies that might otherwise fall to be relieved under various items within the Group. Note (1A) is amended to deny zero-rating to any extension or annexation to an existing building if it provides for internal access to the existing building, or if separate use, letting or disposal is prevented by the terms of any convenant, planning consent or similar permission. Note (2A) is amended to exclude from zero-rating relief carpets and carpeting materials when installed in the course of the construction of any building.
Article 8 of the Value Added Tax (Special Provisions) Order 1981 prevents the deduction of input tax on non-standard fixtures and fittings incorporated by a speculative builder in a dwelling which he is building for supply by sale or long lease. That article is now further amended to prevent deduction when a person effecting works to an existing building intends to sell or grant a long lease on any dwelling resulting from his works. In addition, carpets and carpeting materials are added to the list of non-standard fixtures and fittings in respect of which input tax deduction is specifically prevented. This latter change complements and produces the same net effect for speculative builders as the amendment to Note (2A) does for contract builders.
The amendments described above came into force on 21st May 1987 under S.I. 1987/781. This Order continues them in force on the expiry of that Instrument.