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In Westow Cricket Club v HMRC [2019] UKFTT 712 TC07484, the First Tier Tribunal (FTT) ruled that the Club did not have a reasonable excuse against a penalty for getting the zero-rating certificate wrong, after relying on a letter from HMRC.

The Club raised funds to build a pavilion and sports hall. Prior to any building work starting, the Club wrote to HMRC seeking guidance on whether the construction of the pavilion and sports hall qualified for zero-rating as a village hall or similar building. HMRC’s response was not definitive and referred the Club to the relevant HMRC notice. The Club interpreted the response to mean that the construction qualified for zero-rating and a certificate was issued to the contractors undertaking the work.

HMRC issued a penalty charge for getting the zero-rating certificate wrong. The Club argued it had a reasonable excuse as it had sought guidance from HMRC before the construction work started and had relied on HMRC’s letter.

The FTT criticised HMRC for potentially leaving taxpayers in ‘no man’s land' by expressing a view, while at the same time saying that this was not a definitive response.

The Tribunal also concluded that there was not a reasonable excuse for the Club on two grounds:

The FTT also assessed whether the penalty was disproportionate, but concluded that the penalty imposed was nothing more than the VAT that was properly due.

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Land & Property: Relevant residential & relevant charitable purpose
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Land & Property VAT (notes)
An outline of the VAT treatment of some of the more common supplies of land and property.

External links

Westow Cricket Club v HMRC [2019]