R&C Brief 8 (2021): Government funded grants paid to education bodies

HMRC has met the concern expressed at the outcome of the case of Colchester Institute in the most constructive manner available to them.  They are to be congratulated on that.

The appellant’s case was based on the idea that funding from SFA and ESF amounted to exempt consideration for a supply of education. The Upper Tribunal agreed to this.  For the appellant to win the case overall it needed to win on a second point, but was unsuccessful.  The decision therefore went in HMRC’s favour, despite HMRC’s defeat on the funding liability issue.  As the appellant withdrew from the process, HMRC was unable to appeal the point on which the Upper Tribunal had been against them. …..click HERE to read more

Supreme Court decision in Balhousie VAT case

The litigation in the case of Balhousie has reached its conclusion with a Supreme Court decision (2021 UKSC 11).  This concerns the application of the ‘clawback’ provisions that apply where the construction or purchase of a new building was made on a zero rated basis, and the building is later disposed of, within the first ten years of life.  I have already reported on this case at its First Tier and Upper Tribunal stages here.  However, I will start this commentary by explaining its relevance to charities. More info: click here

Reasonable Excuse for Relevant Charitable Purpose VAT Relief

A decision of the Upper Tribunal  (Westow Cricket Club v HMRC) appears, at first sight, to having nothing to do with charities, but it has a passing interest, since it refers to a CASC and a case (not the first) in which a CASC mistook itself for a charity.

Westow Cricket Club (a CASC) issued a….. (to read more, click below) https://www.charitytaxgroup.org.uk/commentary/reasonable-excuse-relevant-charitable-purpose-vat-relief/

The Cost Sharing Exemption and VAT Groups

This commentary arises from the decision of the CJEU in the case of Kaplan (C-77/19).  The decision precedes the end of the Transition Period, and is thus binding precedent, save to the extent that this can be overridden by senior courts of the UK.  This means, essentially, that the decision sets the applicable rule unless and until it is specifically revoked by a senior court or by a change in legislation.

The case involved an international supplies dimension (which the CJEU did not answer, since its answer to the other point rendered it otiose), and one that has application to entirely UK sited entities.  The latter question fell into two parts, as follows: click here for more

Payroll Services provided by Charities

Charities sometimes provide payroll services to persons with disabilities, to allow these people to employ, and remunerate, a carer.  The provision of care services by a charity would be exempt from VAT.  Where the only service provided is of running the payroll service, the charity will argue that that service is exempt, owing to the special needs of the service recipient and that person’s incapacity to deal with the arrangements for employing the carer.

Following an unsatisfactory piece of litigation,… read more by clicking here

VAT and Supporting People Supplies

This commentary relates to the case of Birmingham YMCA (and others), about which I wrote a previous commentary in September 2018, and in respect of which an appeal has been heard at the Upper Tribunal (UKUT0143). From the VAT technical point of view, this is a case about the application of VAT exemption to welfare services. Where a decision is made by the First tier Tribunal, and an appeal against that fails, it is usually a simple case of upholding the arguments that had been accepted by the first judge. Whereas the Upper Tribunal, in this case, dismissed the charities’ appeals, it is worth pausing to consider why, and what this tells us, in addition to the decisions by the first judge. To read more – click here

VAT zero rate for reading material

Charities and their advisers will be aware of the favourable zero rate VAT regime for reading material that has applied in the UK since the days of purchase tax.  They will also know of the seemingly illogical stance of HMRC that this relief only applies to old fashioned physical print formats and not to modern digital formats.  This has been a bone of contention for many years, and one conglomerate, News Corp UK & Ireland, has litigated over the issue to seek zero rating on the digital equivalents of their well-known newspapers. Read more by clicking here

VAT on matchmaking

Art or science?

If you want to research what actually happens in certain walks of life, VAT tribunal reports are a treasure trove. We learn about the purpose and activities behind pilates (Hocking [2014] UKFTT 1034), belly dancing (Cheruvier [2014] UKFTT 7), fortune telling (Indian Palmist (2003) VAT Decision 18397), and several more.

To this, and the others, we can add matchmaking services, brought to us by the case of Gray & Farrar International LLP [2019] UKFTT 684. 

That’s a grand sounding name, but, in reality, one person is responsible for providing the service, namely Claire Sweetingham, assisted by a small team. So, what kind of person is she and what is the service?

To read more (click here)

Risk of Supporters becoming responsible for VAT

It is quite common in charity circles for helpful supporting individuals to become involved in assisting the charity in various ways.  In some cases a fundraising event, such as a golf day, might be organised, year on year, by the same individual, all the proceeds of which go to that charity.  Or a group of supporters, such as the PTA of a school, may sell things ‘for’ the school.  Or an individual may run a catering or gift shop operation on the charity’s site, and provide the proceeds to the charity. To read more (click-here)