In Swanage Sea Rowing Club (SSRC) v HMRC [2020] (TC07904), the First Tier Tribunal (FTT) decided that a boathouse constructed by a charity was not intended for a ‘relevant charitable purpose’.

SSRC is a club registered as a charity providing facilities for sea rowing. It constructed a building to be used as a boathouse with storage and toilets.

  • SSRC claimed the building was used solely for its charitable purposes hence qualified for zero-rating.
  • It issued a zero-rating certificate to the builder.
  • SSRC also claimed that a verbal confirmation of zero-rating was provided by HMRC through the VAT enquiry line.

HMRC disagreed and argued that the new building was used “in the course or furtherance of a business”. This was on the basis that the club received consideration in form of both subscriptions and rowing fees. Accordingly, zero-rating was not available on the construction of the building.

SSRC appealed to the FTT. The FTT considered:

  • Whether the conditions for zero-rating were met.
  • If not, did SSRC have a reasonable excuse for issuing the zero-rating certificate?

The FTT found that zero-rating did not apply due to:

  • The boathouse was not intended for use solely “otherwise than in the course or furtherance of a business”.
  • The boathouse was not used solely “as a village hall or similarly in providing social or recreational facilities for a local community”.

In addition, the FTT found that SSRC had a reasonable excuse for issuing the zero-rating certificate even though there was no evidence of written evidence of confirmation from HRMC. The appeal was accordingly allowed in part.

Links to our guides

Land & Property: VAT
An outline of the VAT treatment of some of the more common supplies of land and property.

Land & Property: Relevant residential & relevant charitable purpose
Property that is used for a relevant residential purpose or a relevant charitable purpose qualifies for special VAT rules.

Penalties (VAT)
When do penalties apply for VAT? What penalties are charged and how can they be mitigated?

CPD Reasonable Excuse

External link

Swanage Sea Rowing Club (SSRC) v HMRC [2020] TC07904 TC07904