Relevant Charitable Purpose / Relevant Residential Purpose – change of use

Where a change of use relating to Relevant Charitable Purpose (RCP) or Relevant Residential Purpose (RRP) occurs within ten years from completion of a zero rated building, a change of use charge will apply.

Since March 2011, this charge applies:

  • on each occasion that there is an increase in the use of the premises for a non-relevant purpose;
  • when a person disposes of the entire interest in the premises (or part of); or
  • where the premises (or part of them) are used for a non-relevant purpose.

The charity may, however, be able to deduct some or all of the charge as input VAT if the non-relevant use of the building is taxable. Once a building has qualified for zero rating, users must be careful when making even small changes to their use of the building that they do not trigger a change of use charge which could result in a VAT bill.

This HMRC VAT Manual provides additional background information.

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