Zero rating applies

VAT treatment of clubhouse used by a charity as a village hall

The taxpayer was a not-for-profit community-based sports club registered with the Charity Commission for Northern Ireland. It built a new clubhouse in 2010 that was used by several charities and community bodies as well as the football club.

The management committee issued a certificate to the main building contractor to secure zero rating on all construction services. It believed that the new building satisfied the definition of relevant charitable purpose because it qualified for use as a village hall in accordance with VATA 1994 Sch 8 group 5 item 2 and HMRC’s guidance in VAT Notice 708 para 14.7.3. However HMRC said the clubhouse was used mainly by the football club and the building work should have been standard rated. It issued a 20% penalty under VATA 1994 s 62 based on the...