Incorrect VAT certificate for builder services

The taxpayer built a ‘water sports hub’ to be used by itself and other local sports clubs. The complex included a gym which was available to non-members. The club issued a zero-rating certificate to the builder on the basis the building was intended to be used for a charitable purpose otherwise than in the course of a business.

It was aware of the First-tier and Upper Tribunal’s decisions in Longridge on Thames (TC2574) and [2015] STC 672) which concerned a similar project and indicated that the subsidised pricing and use of volunteer labour within its new building would allow it to qualify as non-business. The club felt justified in issuing a certificate to obtain zero-rated construction services on its building because the gym was also subsidised. This was important because the club was not VAT-registered so had no scope for input tax recovery. The club also received counsel’s opinion that ...