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Charity & Business – who is liable for VAT?

13th Dec 2019
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The Tax Tribunal heard a case involving a social club bar run in association with a Church in west London. The Parish priest needed someone to operate the bar on behalf of the church congregation.

The Appellant Marites Salabit signed what she thought was a management agreement to run the bar on behalf of the church. In reality this was an arrangement for her to enter into business in her own name. The terms of the agreement (para 9 of the decision) cannot be read in any other way.

HMRC and, on appeal, the Tribunal, held that the business was in Ms Salabit’s name. Therefore, the liability to register for and pay VAT was hers, not the Church’s.

I did note that there is no indication that the Church and Ms Salabit sought independent legal advice on the arrangement. For any church or other charity, this is essential in relation to a business activity.

You can read the full decision here: http://www.bailii.org/uk/cases/UKFTT/TC/2019/TC07450.html 

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