HM Revenue & Customs (HMRC) has clarified its interpretation of a law relating to tax on buildings used for charitable purposes.
Under the legislation, a structure that is intended solely for not-for-profit means can be designated as negligible for tax reasons, provided that the proper certification is given to the developer.
Due to confusion over the application of the word 'solely' in the provision, HMRC has now decided that in debatable cases if the building is used for the relevant purposes for at least 95% of the time, it qualifies for zero-tax purposes.
According to the law, if edifices are used for business functions within ten years of being constructed then they must pay VAT to HMRC to signify that it has ceased to be eligible.
Extra Statutory Concession (ESC) 3.29 and two related concessions that are currently applied to settle disputes will now be withdrawn after a 12-month transitional period starting on 1 July.
HMRC recently released an updated list of the UK's double taxation treaties with other countries.
HMRC decides on charity tax law
