Zero rating on works to church

St Joseph’s Church in Stevenage was built in 1950. It had been divided internally in the 1970s to provide a hall but in 2016 various works were carried out including construction of a new hall. This had its own access separate from the main church building as well as its own toilets and kitchen.

The taxpayer claimed that the work on the hall qualified for zero rating as an annexe (Notice 708 para 3.2.6). It had been ‘designed and constructed so that it could be used independently of the main church building’ and ‘parishioners holding a meeting in the hall had no need to access the main church building’.

There was no dispute about the building being used for a ‘relevant charitable purpose’ (para 3.2.5) but HMRC said the new hall was an enlargement or extension of the existing structure so was not zero rated....