According to the select committee looking into how best to protect and preserve the nation's heritage, the present tax regime 'works against [the] conscientious maintenance of historic assets.'
Under the current rules repairs to ageing buildings are not VAT-exempt - a policy which has meant it is often cheaper for developers to knock down and replace deteriorating gems than refurbish them.
The only exception at present is the Listed Places of Worship Grant scheme which allows for tax refunds on repairs to listed buildings owned by charitable bodies - a programme the group suggested should be extended to building preservation trusts and other charities.
The committee said: 'The present VAT regime for repairs distorts priorities, rewards neglect and works against conscientious maintenance of historic assets.
'The result can be either a slide towards demolition or a call on public funds for grant aid. We find it extraordinary that the Government did not take up the opportunity afforded by the EU earlier in the year to seek a carefully targeted relief... [when] opting in would have cost the government nothing.'
There were also suggestions that tax breaks should also be applied to some privately owned buildings. The report goes on: 'Proper consideration should be given to including heritage properties in private ownership where a clear public benefit can be demonstrated.
'The Treasury should recognise that the majority of potential private owner beneficiaries would not be high income earners; and many of the buildings at risk that would stand to benefit are not residential properties.'
Heritage Link, the representative body for a raft of conservation and preservation bodies, welcomed the report.