Zero-rating claim succeeds

The taxpayer Caithness Rugby Football Club was a charity registered in Scotland. It built a new clubhouse for £300 000 of which 50% came from Sports Scotland and the rest was funded from grants and fund-raising events.

The club assumed the building would be exempt from VAT under VATA 1994 Sch 8 group 5 but HMRC’s view was that it was standard rated.

The legislation allows zero rating for construction services supplied to buildings used by a charity if it is a village hall or similar used by a local community for social or recreational purposes.

HMRC said the key issue was the intended use of the building at the time of construction not subsequent use when the benefit of hindsight was available. The higher-than-expected use by other organisations was irrelevant. When it was built the clubhouse was mainly intended for use...