Matter of control

VAT treatment of a clubhouse

Caithness Rugby Football Club a charity registered in Scotland built a new clubhouse funded in part from Sports Scotland and the rest from grants and fundraising events. HMRC said the building works should be standard rated but the First-tier Tribunal concluded they should be zero rated under VATA 1994 Sch 8 group 5 note 6(b).

HMRC appealed. It said to satisfy note 6(b) the local community had to direct or control the use of the building. The clubhouse in this case had a much broader use. HMRC referred to article 17 of the Second VAT Directive which states that reduced VAT rates or exemptions can apply only ‘for clearly defined social reasons and the benefit of the final consumer’.

Lord Doherty sitting as a judge in the Upper Tribunal said nothing in article 17 suggested that the...