“Lack of accuracy costs charity dear” by Les Howard, freelance VAT Consultant, working mainly alongside vatadvice.org, a specialist VAT advisory practice

Les Howard explains why clear communication and keeping concise records are of paramount importance.

A combination of complex VAT matters and less-than-accurate documentation is a recipe for a disaster.

The Bletchingley Church House Charity (BCHC) Tax Tribunal decision concerns such a situation. The FTT decision contains several matters worthy of note. File under ‘pitfalls to avoid’.

The substantive case concerned a community building providing ‘village hall’ facilities to local organisations and also for use by businesses. A major renovation was planned, but VAT of around £87,000 was likely to be lost. BCHC entered into an arrangement to mitigate this loss. Since the property had remained in its original ownership, the suggestion was made that, after renovation, the property be supplied as the first grant of a major interest of a building to be used for ‘relevant charitable purpose’ (RCP), and therefore be zero-rated (Sch 8, Group 5, Item 1(a)(ii)). So far so good.

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