Alteration works to cathedrals, castles and other listed buildings in the UK could be subject to VAT under planned European legislation
If the proposals become law Britain could lose the right to charge a zero rate of VAT on alterations to non-residential listed buildings. Instead the rate would be charged at that for repair work, which currently stands at 17.5%.

Construction Confederation director of taxation Liz Bridge said the measure would lead to a deluge of complaints. She said: "Everyone says that listed buildings are wonderful but they do sometimes have design faults, so you have to alter them to keep them standing up."

Bridge said she expected strong opposition from the House of Lords, bishops, and architectural lobby groups such as the Georgian Society. She said: "It is a bit like saying you want to chop the fingers off orphans."

Bridge called on the government to hand out grants for alterations to listed buildings. She said: "The European Commission feels you should aid listed buildings by grants, not by offering reduced VAT. There is going to have to be money for alterations introduced to the grant system."

Under the European Commission proposals, announced last month, European Union member states would be allowed to offer VAT reductions or exemptions only on a list of products, known as Annex H.

Alterations to residential listed buildings could retain VAT exemption because housing is one of the items on the Annex H list. Non-residential buildings are not on this list, so they would be subject to Britain's standard VAT rate of 17.5%.

Work to be included under the heading of "alterations" includes structural underpinnings and dampproofing.

It is a bit like saying you want to chop the fingers off orphans

Construction Confederation director Liz Bridge

The government contributes 12.5% of the cost of repairs to listed places of worship under a scheme introduced in the March 2001 Budget.

The commission's proposals can only come into effect if the EU's Council of Ministers approves them this autumn.