Caithness Rugby Club
Zero-rating - whether new clubhouse to be used as a village hall or similarly.
The taxpayer, a charity, had written to HMRC asking for a ruling to confirm that the construction of their new clubhouse would be zero-rated.
HMRC disagreed, suggesting that, as the control of the clubhouse was not in the hands of the community, the building works could not be zero-rated.
The upper tier Tribunal disagreed and stated that the use of a building could be intended to be at the disposal of a local community even though the community was not the body directing or controlling its use.
This case represents another victory for the taxpayer in the application of note 6(b) to Group 5 of Schedule 8. Namely whether community type buildings despite some undeniable business use (supplies of catering, drinks etc.) can be viewed as charitable. The legislation predicates the zero-rating of such construction services on the resultant building being used 'solely' for a relevant charitable purpose (RCP). Note 6(b) to the group states that RCP includes use as a village hall or similarly.
HMRC have now lost a number of these cases. Perhaps it is time to review their policy. For full details see below.