A UK charity has won the right to claim tax relief on the cost of building a training centre in a tax case that could have major financial implications for other charities. VAT relief on supplies to charities was £300m in 2012-13, according to HMRC.
Longridge On The Thames, a Buckinghamshire charity that provides outdoor activities, argued that construction of a new training centre should be zero-rated for VAT purposes, in line with rules for new buildings that are used wholly for "relevant charitable purposes".
But HMRC argued that because the charity charged fees for its activities it was carrying out business activities and was not entitled to relief.
Longridge appealed to the first-tier VAT tribunal (Longbridge on the Thames v HM Revenue and Customs, UKFTT 158). The tribunal ruled that, even though Longbridge charged fees, these were only to fulfil its charitable objectives and were heavily subsidised by donations.
Kevin Hall, a VAT consultant at Gabelle, said...