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Brexit provides the opportunity to rebalance anti-retrofit VAT rules

Paul Finch

The perverse tax rules that favour new-build over refurbishment could go once we no longer have to conform with EU regulations, writes Paul Finch

On the assumption that we leave the EU at some point this year, it would be sensible to review what we may be able to do in future which current regulations make difficult or impossible. The two most obvious areas are procurement and VAT, both of which are in urgent need of change.

In respect of VAT, we could rebalance the tax burden which falls upon retrofit as opposed to new-build. It is perverse that the tax system punishes re-use and renewal while giving a free ride to brand-new work. Until now the excuse given for not changing this state of affairs has been the need to conform with EU regulations.

Perhaps the RIBA could take a lead, in the process promoting its sustainability agenda

An important factor for the Treasury is that total receipts do not fall as a result of any change, hence the need to rebalance the impost rather than simply to flip it. This should not be too complicated to calculate, so perhaps the RIBA could take a lead, in the process promoting its sustainability agenda. This would be more useful than moaning about an impending apocalypse if we can no longer import cheap architectural labour.

As for procurement, the RIBA should again be taking a lead, as part of a broader initiative taking into account what happened at Grenfell, where it is very clear that liability transferred is liability diluted. We need a new dispensation, without being told by Brussels that we cannot change our procedures without their say-so.

The Tulip and the Tower

Convincing opinion poll evidence that the public likes the idea of Foster + Partners’ Tulip project in the City of London is not surprising. The public likes imaginative ideas (the Garden Bridge idea initially polled well). Of course, the chattering classes always know better, reinforced by toffee-noses from Historic England and Royal Parks & Palaces, who claim that the Tulip will cause irreparable harm to the Tower of London.

Similar nonsense was trotted out to try to stop the Shard, happily with no effect. At the public inquiry into that proposal, while giving evidence, I was asked about a CABE commissioner visit to the tower when we talked to senior Beefeaters about the Renzo Piano design. What had they said? I responded that they did not think Renzo’s tower would affect them. How did we regard this opinion? ‘As Beefeaters, we regarded them as serious stake-holders’. It was encouraging to get a laugh out of the inspector.

The point about the Tower of London is that, architecturally, it is tough as old boots. Nothing can compromise its integrity; treating it as a delicate flower is ludicrous. 

English Heritage rewrites history

Friends and admirers of the late great film-maker Derek Jarman are baffled by the behaviour of English Heritage in respect of a proposed blue plaque to mark his life. The obvious place to locate this is on the Phoenix House block of flats on Charing Cross Road, the area and building most associated with him.

Jarman plaque

Jarman plaque

EH, while accepting the case for a plaque, has other ideas about a location, preferring somewhere in the Butler’s Wharf area, where in reality Jarman scarcely lived. The only relevant building he used there no longer exists.

Bizarrely, the reason offered up by EH is that Soho ‘has too many plaques’, while more are needed south of the Thames. If EH is going to be dishonest about history and geography, it needs a serious governance shake-up.


Readers' comments (8)

  • There's a good deal about the behavior of English Heritage that doesn't make sense - unless it's driven by an unhealthy regard for political correctness.
    Incidentally, is it beyond the powers of the AJ's IT whizz to change this website's use of the American version of 'spellcheck' in favor of the native version. Or is this, perhaps, a harbinger of our post-brexit future?

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  • Not sure the VAT reasoning is correct. France applies c.20% VAT to new build and around 9% to refurb projects. So the EU regs argument seems flawed. Another case of the straight banana?

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  • Quite possibly! Makes current policy seem even weirder.

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  • Yes, they are perverse, but my understanding is that they could always be changed despite EU Regulations. They do prevent Refurbishment work becoming zero rated, but there is nothing preventing a reduction to a lower rate. In fact a sensible suggestion that was often put forward was that both Refurb and New Build become 5% rated.

    See https://ihbconline.co.uk/newsachive/?p=6869

    Just another example of blaming the EU for something we could have chosen to do ourselves!

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  • As I understand it, this country decided what VAT rates to apply, and once decided, under EU rules the rates cannot be changed.

    But, in 2016 after a fuss, the government negotiated with the EU a reduction from 5% to zero rating on Women's Sanitary Products.

    There are such good economic and social reasons to equalise the VAT on new v refurb, surely we could negotiate that change… if we weren't so mired down in some other business.

    We only need to blow the bloody doors off…
    We don't need blow the whole thing up!

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  • Completely agree with Jeremy & David. It is possible to work within EU rules and enjoy all the other benefits of the Union. And that adjusting / balancing the VAT rate is so important, especially in a country with limited space for new build and a great building stock gently decaying.

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  • Another good example of spurious claims being regurgitated without proper fact checking.

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  • The procurement situation is more straightforward — as far as I can tell!

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