Readers’ forum: Should charity repay VAT to HMRC?

I act for a charity – with charitable objectives of religious worship – and four years ago it was left some land and money by one of the worshippers in his will.

The charity constructed a new building on the land and benefited from zero-rated building services; the builders also provided materials as part of their work which were also zero rated.

We issued a zero-rating certificate to all of the builders because the building was wholly used for charitable purposes. The charity has never registered for VAT because it has no taxable sales.

However due to declining numbers of worshippers the trustees have decided to rent smaller premises in the local town centre for the charitable activities and this rent will be funded by renting out the current building to a firm of solicitors that will trade from the premises. It is my understanding that...