In United Grand Lodge of England v HMRC [2023] UKUT 00307, the Upper Tribunal (UT) found that membership fees charged to Freemasons were not exempt from VAT.

  • The United Grand Lodge of England (UGLE) is the governing body for the majority of Freemasons in England and Wales. It charged VAT to its members on membership fees.
  • In 2014 and 2018, UGLE made claims to HMRC for repayment of the VAT charged, totalling £2.83m, on the basis that between April 2010 and March 2018, its supplies were exempt from VAT.
  • HMRC rejected UGLE’s repayment claims, asserting the supplies were taxable.

The Principal VAT Directive (PVD), and Group 9, Schedule 9, VATA 1994, exempt subscriptions from VAT where they relate to certain bodies with specific aims.

In the case of UGLE, the supply of its Services to members would be exempt from VAT if:

  • Its philosophical, philanthropic and civic aims constituted a single primary aim.
  • When taken together, its philosophical, philanthropic and civic aims were its only main aims.

UGLE Appealed to the First Tier Tribunal (FTT), which rejected UGLE’s appeal, finding that:

  • UGLE had a philosophical aim which was a central or main aim.
  • The provision of ‘Relief’ was also a main aim of UGLE and at least of equal importance to its philosophic aim.
    • This aim of Relief had two parts: donations to unconnected good causes and supporting Freemasons and their dependants in distress.
    • The second of these parts was not a philanthropic aim for the purposes of the PVD.
  • As the provision of Relief was a main aim that was partly non-philanthropic, the services supplied by UGLE to its members were not exempt from VAT.

UGLE Appealed to the Upper Tribunal (UT), which found that:

  • The FTT had erred in law.
    • It had not provided adequate reasons as to why UGLE did not have one main philosophical aim, with activities in support of the Masonic charities being in service of the philosophy of Freemasonry, in particular the principle of Relief, thereby falling within UGLE’s philosophical aim.
  • The practical provision of Relief was not just part and parcel of the philosophy of Freemasonry such that it had to be regarded as being in service of that philosophical aim.
    • It was not incapable of being regarded as a main aim in its own right.
  • Following the FTT’s finding that the provision of Relief was a main aim of at least equal importance to UGLE’s philosophical aim, the UT found that the provision of Relief was not subservient to the philosophical aim and did not merely facilitate the achievement of that philosophical aim.
    • This finding of the FTT was unimpeachable.

The appeal was dismissed.

Useful guides on this topic

Appeals: VAT
How do I appeal an HMRC decision? How do I appeal a penalty? How can I request a Statutory Review? 

Goods or services for VAT
What are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.

Reclaims and unjust enrichment
When can VAT reclaims be made? What are the time limits? What is unjust enrichment? Why might unjust enrichment prevent HMRC from making VAT repayments? 

External link

United Grand Lodge of England v HMRC [2023] UKUT 00307