In Madinatul Uloom Al Islamiya ('the College') v HMRC [2019] TC07433, the First Tier Tribunal (FTT), found that the construction of a new multi-functional hall did not qualify for VAT zero-rating.

  • The College, a charity, ran a fee-paying boy’s residential school that teaches the national curriculum and Islamic studies. It was partly funded by donations.
  • It demolished an existing building and a new hall was erected.
  • It issued a certificate to the contractor that it would be used solely for non-business purposes. As a result the contractor would zero-rate the supplies.
  • HMRC contended that as the College was carrying out an economic activity the building works could not be zero-rated.
  • The College appealed to the FTT. It argued that its fees were donations and where a student cannot afford to pay the fees, the fees were forgiven or waived.

The FTT found, following the approach adopted by the Court of Appeal in the Wakefield College case, that:

  • There is a reciprocal performance whereby the College educates the students in return for the fees charged. A consideration was received for a supply.
  • The provision of education was the sole activity of the College.
  • The amount of the fees charged were significant, both in value and relative to the cost of providing the education and broadly similar to those charged by other Islamic faith schools.

As the facts pointed to the supply of education is made to obtain income, the FTT concluded that the relevant 'charitable purpose' test was not met. The construction of a new multi-functional hall did not qualify for zero-rating.


Charities providing partly-funded courses risk as being seen as providing an economic activity. They need to carefully consider whether zero-rating of construction contracts is possible.


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

Land and property: Non-residential (subscriber)
This guide considers the VAT treatment of the supply of non-residential property.

External links

Madinatul Uloom Al Islamiya ('the College') v HMRC [2019] UKFTT TC07433