The taxpayer, a charity, provided education courses. It claimed its newly constructed premises should be zero rated for VAT purposes.
HMRC disagreed, saying the building was to be used in the course of a business; the taxpayer appealed to the First-tier Tribunal, which dismissed the case.
The Upper Tribunal noted that neither the taxpayer nor the Revenue had informed the First-tier Tribunal that it could have found a de minimis business use.
More specifically, the tribunal should have been referred to the fact that in VATA 1994, Sch 8 group 5 item 2, ‘Construction of buildings etc.’, the use of the word ‘sole’ could be taken to allow up to 5% business use.
The tribunal had instead proceeded on the basis the appeal should fail if the building was used for business purposes.
The First-tier Tribunal’s decision was set aside, and the appeal remitted for reconsideration.
