HM Revenue & Customs ("HMRC") has surprisingly won a recent case in the Upper Tax Tribunal relating to Charities Relief (Pollen Estate and Kings College London ("KCL") v Commr HMRC 2012 UKUT 277 (TCC)).
The case involved a joint purchase by KCL and one of its senior employees of a residential property in the proportions 46.3% and 53.7% respectively. Readers will be aware that SDLT Charities Relief applies to the acquisition of UK land by a charity where certain conditions are met, including that the property will be held for the charitable purposes. On this basis, as a charity, KCL considered that it could claim Charities Relief on the 46.3% it acquired. This seems an entirely reasonable conclusion, by HMRC disagreed – and more importantly so did the Upper Tribunal. The reasoning was that there was a single "land transaction" here and that, since only one of the joint purchasers was a charity, no relief was available at all.
What does this mean for a charity which plans to jointly acquire a property? The transaction should be examined carefully in order to ensure that Charities Relief is not lost. For example, a charity which acquires land (on its own), "the greater part" (51%) of which will be used for charitable purposes, may still be able to claim Charities Relief in full, albeit that any subsequent disposal to a non-charity will lead to a claw-back of the appropriate proportion of the relief claimed. So a subsequent sale of 20% of the land would generally result in losing 20% of the SDLT relief. This contrasts with a joint 80:20 purchase upfront between the charity and non-charity, on which no relief would be available after KCL.
VAT: Listed Buildings
Alterations to listed buildings will cease to be eligible for "zero-rating" from 1 October 2012, and HMRC have published further guidance on the new rules. Anyone carrying out alterations to listed buildings should consider the new rules carefully, as there are concessions for planning consents applied for before 21 March 2012 or where written contracts were entered into before this date. In terms of mitigating the effect of the new rules, consideration should always be given to whether any work is creating an "annexe", which may in certain circumstances still qualify for zero-rating. Further, it should be noted that a £30m fund has been made available for alterations to listed churches to alleviate the effect of the new rules.