Taxpayer had reasonable excuse for issuing zero-rated certificate

The taxpayer was a not-for-profit community-based football 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 itself.

The management committee issued a certificate to the main building contractor to secure zero rating on all construction services (VATA 1994 Sch 8 group 5 note 6(b)). 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 Sch 8 group 5 item 2 and HMRC’s guidance in VAT Notice 708 para 14.7.3. The Revenue disagreed saying 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...