In its 2012 budget statement, the government announced that alterations to listed building would be subject to 20% VAT. Similar VAT increases were also announced for static caravans and for warm takeaway food such as sausage rolls and pasties. The latter two proposals have been scrapped or modified. The Federation of Master Builders (FMB) wants the government to scrap its listed buildings VAT increase too.
FMB chief executive Brian Berry said: “The VAT increase is not actually about addressing an anomaly in the tax system. It’s about the government trying to raise more money. There is a lack of evidence to justify the government's claim that the majority of alterations are not 'necessary for heritage purposes'. There were over 29,000 listed building consent decisions between March 2010 and March 2011, but the government has chosen not to take the time to properly consider the evidence available.”
Mr Berry said: “It is frustrating that the government has already admitted this VAT increase is likely to harm our historic buildings by offering additional compensation to listed churches, but has offered nothing to help protect the majority of our listed buildings in rural and urban settings across the UK. And on top of the risk to our heritage is the risk to the construction sector. The increase to 20% in the standard rate of VAT in January 2011 caused a fall in demand for all housing repair, maintenance and improvement work and our research has suggested that over 10,000 jobs were lost in the UK economy by the end of last year as a direct result of this lower level of demand. Why is the government risking further job losses when its priority is to restore growth in the economy?”
He concluded: “The government could do a lot to restore the trust of small businesses, charities and communities by allowing time for proper consultation before rushing into significant tax changes such as this one. The need is even greater in this case where the increase will apply retrospectively.”