Conditions not satisfied for zero rating on builder services

The taxpayer supplied construction services to a registered charity Zoological Society of Hertfordshire (ZSH) to build a new lions’ enclosure at the zoo and an outside exhibition area called World of Dinosaurs. The latter consisted of a walkway through a densely wooded area and life size animated models of dinosaurs.

ZSH provided the taxpayer with a certificate stating that the labour and materials qualified for zero rating on the basis that they were buildings to be solely used for a relevant charitable purpose. HMRC disagreed saying the World of Dinosaurs was not a building and that the lions’ enclosure was partly used for business purposes because the zoo earned annual fees of £5m from admission charges received from the general public.

Note that if a new building will be solely used by a charity for a relevant charitable purpose the building services will be zero rated...