UK: The Listed Places Of Worship Grant Scheme – An Overview

Last Updated: 18 June 2014
Article by Matthew Feather

Expenditure incurred in carrying out repairs and making alterations to buildings used as places of worship is normally subject to VAT at the standard rate. Accordingly, the Listed Places of Worship Grant Scheme (the "LPWGS") provides funding grants towards the VAT incurred when such expenditure takes place in relation to listed buildings wholly or mainly used for public worship.

This note provides an overview of the LPWGS and highlights some changes which have taken effect from 1 October 2013.

The LPWGS has no direct relationship with HMRC and is under the auspices of the Department of Culture, Media and Sport. The LPWGS is administered from an office in Newport, South Wales. A useful source of information regarding the LPWGS is the website which can be found at www.lpwscheme.org.uk . Familiarity with all aspects of the website is essential for applicants as there are certain pitfalls of which to be wary. For example, expenditure covered by invoices more than 12 months old at the date of the application simply will not be eligible for relief. There is no formal statutory appeals process with regard to decisions taken by the administrative staff of the LPWGS. In the event of a disagreement the final recourse will be a direct appeal to the Secretary of State for Culture Media and Sport, possibly followed, in extreme cases, by a letter to the Parliamentary Commissioner for Administration.

Applicants will need to consider if the expenditure they are undertaking will be eligible under the Scheme.

First, the building in question must be listed. This means listed with English Heritage, CADW, Historic Scotland or the Northern Ireland Environment Agency – Local Authority listings are not included. Furthermore, the expenditure must relate to work undertaken when the listing is in force. It would be sensible for any claim to include sufficient evidence to enable the LPWGS staff to identify the listing as this will minimise the risk of delay. If a building is not listed, consideration can be given to applying for listing which raises various separate issues outside the scope of this note.

Secondly, the building's sole or main use must be as a public place of worship.

Therefore, while a church or mosque might easily fall within this description, there will be borderline cases in which it is more difficult to determine whether a building is "solely", or perhaps more problematically, "mainly", used as a public place of worship. A church hall or Islamic centre might, for example, be used as a place of worship but whether this is a main use might not be an easy question to answer. The LPWGS might be quite flexible on this issue as they have been known to provide grants in relation to buildings owned by faith groups who do not have obvious places of worship, such as churches or mosques, and whose buildings double up as administrative centres and as places for worship. Furthermore, the website guidance suggests that if a church hall is primarily used for public religious worship the Scheme may be prepared to meet some of the costs, which will be apportioned between worship and non worship related use.

The building must also be used as a public place of worship at least six times per year. However, there are certain exceptions for places of worship within monasteries, nunneries or other similar establishments. Also exempt from this requirement are churches owned or vested in the Historic Chapels Trust, the Friends of Friendless Churches, the Scottish Redundant Churches Trust, the Churches Conservation Trust and the Welsh Religious Buildings Trust, all of which exist to look after redundant places of worship. One of the changes which took effect from 1 October 2013 is that applications for funding are also now accepted from religious or charitable groups whose principal or primary purpose is to conserve, repair and maintain redundant listed places of worship which are not in private ownership.

The work for which eligible expenditure is incurred must relate to the repair, maintenance or alteration of the fabric of an existing listed building. Previously, expenditure on alterations was not covered by the Scheme because alterations to listed buildings were zero rated for VAT purposes. However, when zero rating for listed buildings was abolished, the Scheme was extended to alterations with effect from 1 October 2012.

Furthermore, with effect from 1 October 2013 the scheme was also extended to cover:-

– the cost of professional fees which directly relate to eligible building work including work at the planning and design stage;

– work relating to Turret Clocks including auto winding;

– work relating to bells and bell ropes (in addition to bell frames); and

– work relating to pipe organs.

The extension to professional fees is a particularly welcome development albeit these must be fees which directly relate to building work, planning and design. This would include the fees of architects, surveyors, conservation advisors, bat inspectors, health and safety advisors etc. It would not include fees for accountancy services, solicitors' fees, fundraising fees etc as these do not directly relate to the works. If certain professional fees cover both eligible and ineligible works (e.g. if the work partly covers place of worship and partly an area of the building used as the Minister's residence) it will be necessary for the fees to be appropriately apportioned.

As the purpose of the LPWGS is to counterbalance the impact of VAT upon organisations which are not registered for VAT, or which are registered but are not able to recover all of their input VAT, funding is only available for work properly chargeable to VAT. If work is zero rated or charged at lower than the standard rate, it is incumbent on the owners of the listed building to ensure they are charged at the correct rate by the contractor. If the contractor charges standard rate VAT for zero rated items, the owners will need to recover that amount from the contractor and not through the LPWGS. For example, HMRC have recently advised that hearing/induction loops when installed in a place of worship are eligible for the zero rate of VAT. Accordingly, claims for this work are not eligible for a grant under the LPWGS.

The procedure for applying for funding requires completion of an application form which can be downloaded from the LPWGS website. Although the form can be downloaded from the website it must be posted to the Newport office. Applications cannot be submitted online. Prior to 1 October 2013, the application needed to be accompanied by the original VAT invoice in respect of the works. However, with effect from 1 October 2013, scanned or photocopied invoices are now accepted but the applicant is still required to sign a confirmation on the application form that the copy is a true copy and that the original will be produced if the claim is selected for audit.

Prior to 1 October 2013, the minimum value of any application was £1,000. However, with effect from 1 October 2013, listed places of worship are allowed, in any 12 month period, to submit one claim for works with a value of more than £500 but less than £1,000.

In conclusion, the LPWGS has been of considerable assistance to organisations which own listed places of worship and which are unable to register for VAT. Recent changes have widened the scope of the LPWGS and gone some way towards simplifying the application procedure and this can only be a welcome development. Furthermore, according to the LPWGS website, the scheme has also, with effect from 1 October 2013, committed itself to deliver a smoother flow of payments to applicants. It will remain to be seen whether this commitment is delivered.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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