The ongoing saga of charity buildings & VAT certificates catches a football club being penalised for issuing a VAT certificate to secure zero-rating. The case looks to have finally come to a close.
The Upper-tier Tribunal (UT) decided against HMRC on two issues in the case of Greenisland Football Club v R & Commrs [2019] BVC 502.
- First, whether the Club’s club house was used for a Relevant Charitable Purpose (RCP) (and therefore its construction qualified for zero rating)
- Second, if not a RCP building had the Club been wrong to issue a RCP certificate did the Club have a reasonable excuse for issuing a zero-rated certificate (and therefore should not pay a penalty).
The tribunal agreed with the taxpayer on both counts but should act as a warning to anyone involved with constructing a charity building. This particular case centres on HMRC’s view that buildings constructed by sports related clubs, even where they are widely used by the community, are not similar to village halls and therefore VAT has to be paid on construction costs. Contrary to HMRC’s views the tribunal held that ownership by local community was not essential which is very positive.
In addressing the penalty issue the tribunal had to explore what advice had been obtained from professional advisors and underlines the importance of retaining written confirmation of all such key information. Had the club been able to produce evidence of the advice received it seems likely that two tribunal hearings might have been avoided.
Key here is to always remember that the rules surrounding land and property are complex. Charity buildings & VAT certificates should always be handled very cautiously and carefully.
If you’re ever not sure about VAT related then please give us a call. Remember sooner is always better.