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18 September 2018
VAT considerations on building costs for new church.
I have received conflicting advice on a VAT issue relevant to a charity client that operates a church. The charity is constructing a new two-floor building in a city centre and will use the ground floor entirely as a place of worship. The first floor will be rented out at a commercial rent to another charity (also a religious organisation) wholly for its charitable purposes.
I have three questions for Taxation readers:
- Can my client issue a certificate to a builder for zero-rating on the construction of the new building because it is being used by two charities and no commercial organisation?
- Or can we obtain zero-rating on only 50% of the builder costs (for the ground floor) because of the commercial rent we will charge for the first floor?
- Would it help if we registered for VAT and...
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