The congregation of Charlotte Baptist Chapel is in talks to buy the St George’s West Church in Shandwick Place for £1.5 million and has lined up an extensive refurbishment, costing a further £1.5m.
But the UK Government’s plans to charge 20 per cent VAT on alterations to listed buildings could scupper the works.
The work would see the category A-listed building’s interior and exterior enhanced, with the creation of creche and nursery facilities, function rooms, improved disabled access and the installation of improved lighting and heating.
Congregation leaders now fear parts of the proposed development will have to be scrapped.
Paul Rees, senior pastor at Charlotte Chapel, in Rose Street, said: “If the VAT proposal becomes legislation, then what we will have to do is modify our plans.
“We only have a certain amount of money – we are raising all of our own funds and not getting any grants from the government. We will have to change the spec of what we are doing – it’s going to change the quality of what we do.”
He added: “It does seem to me crazy that we have a government saying it believes in the Big Society and then it does harm to the churches which do so much good in society.”
Alan Mackinlay, an elder of the St Andrew’s and St George’s West congregation, which is selling the Shandwick Place church to consolidate its activities at its existing building in George Street, said he remained hopeful the deal would go through.
Heritage body the Cockburn Association called on the government to rethink its plans.
Director Marion Williams said: “There’s a particular situation here with the purchase already mid-stream – the chapel went ahead with this project on the basis that it had done its figures and it was viable. This church is an exceptional building and for the congregation to have to cut corners does not do anybody any good.”
Mark Lazarowicz, Labour MP for Edinburgh North and Leith, has been campaigning against the government’s VAT plans. He said: They are not asking for subsidy, they have already raised substantial funds through their own efforts. Why should they be facing this sudden imposition of a 20 per cent charge?”
A Treasury spokeswoman defended the VAT change and said it would correct tax anomalies that had built up over time. She added: “The government is committed to ensuring that listed places of worship are not adversely affected by the Budget proposal and we are actively exploring options with the church authorities.”