In HMRCGreenisland Football Club [2018] UKUT 0440, the upper tribunal (UT) overturned the First Tier Tribunal (FTT)'s decision to allow a club to zero-rate construction of a clubhouse. It agreed that no penalties were due.

  • GFC are a registered charity and a community-based sports club who leased land from a council.
  • They built a new clubhouse and issued a certificate to the builder confirming that the building was intended for use ‘solely for a relevant charitable purpose’.
  • On the basis of this certificate, the builder zero-rated the Construction supplies.
  • HMRC decided that the construction works should have been standard rated and GFC’s certificate was issued incorrectly. It assessed GFC for a Penalty of £53,101, 
  • GFC Appealed to the FTT.

In its decision, Greenisland Football Club v HMRC [2018] TC06321, the First Tier Tribunal (FTT) allowed zero rating on the construction of a clubhouse as the building was for the benefit of the community as a whole.

It found that:

  • Based on the previous binding Upper Tribunal decision of Caithness it does not matter that the management committee of the clubhouse only included GFC members.
  • The clubhouse is used by many local groups and GFC members had no special treatment or preference over bookings.
  • GFC do not use the clubhouse for changing before or after the matches. They have separate changing and shower facilities.
  • GFC was not operating a business at the clubhouse. The income is very low and is used to meet the costs of running the clubhouse.
  • The clubhouse was extensively used for after school clubs, karate classes, mother and toddler groups, fitness classes, as a church on Sundays and birthday parties.
  • The building is used in a similar manner as a village hall.
  • On the basis of the above, zero-rating was appropriate.

In addition, the FTT found that, even if zero-rating did not apply, in this case GFC would have a Reasonable excuse:

  • They studied HMRC’s guidance current at that time.
  • They consulted their accountant and another advisor who bother agreed zero-rating was appropriate.

HMRC appealed to the Upper Tribunal (UT).

The UT found that:

  • The football club built a new club house whose facilities were extensively used by local community groups including many unrelated to sport.
  • Although the club maintained that it was not running a business as their use was no more than 20% of the facilities, and the club had no booking priority over other users. The UT decided that this was still sufficient to establish an economic activity and it exceeded the “modest incidental use” for the club house to qualify for zero-rating as a village hall or similar.
  • It also found that use of the facilities for a subscription is not compatible with a charity. Economic activity extends beyond commercial and profit-making bodies.

On these two grounds, the upper tribunal upheld HMRC’s appeal against the first tier tribunal decision.


In respect of penalties, VAT Notice 708 says that an entity about to engage in such an high-cost commitment should get professional advice. HMRC said that the club should have asked HMRC directly, but that is not what the Notice says. The club did obtain professional advice and followed it. 

The UT agreed that the club had a reasonable excuse and vacated the penalty.

Topical guides

VAT: Land & Property (notes)

VAT: Land & Property (at a glance)

External link

Greenisland Football Club v HMRC [2018] TC06321


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