Caithness RFC VAT case

The Upper Tribunal has released its judgment in the appeal by HMRC against the First Tier Tribunal (FTT) decision in Caithness Rugby Football Club.

This case concerns whether the construction of a village hall for the taxpayer was zero-rated as being intended to provide social or recreational facilities for the local community within the meaning of Item 6(b) of Group 5 of Schedule 8 to the VAT Act 1994, or whether the absence of control or direction by the local community over the running of the facility precluded that.

The Upper Tribunal upheld the FTT’s decision and refused HMRC’s appeal holding that the designation ‘village hall’ required not only the provision of social or recreational facilities but also its management to be vested in the local community.

The Upper Tribunal recognised that the existence or absence of direction or control is a relevant circumstance but is not necessarily a decisive one if the facility is in fact at the disposal and for the benefit of the local community. In the circumstances of this case, a clubhouse built and used to fit principally the requirements of the rugby club, tenant of the clubhouse, does not preclude it to be considered as a village hall as long as it operates and provides facilities as a village hall would and accommodates all users’ needs.