In Westow Cricket Club v HMRC [2021] UT 0023, the Upper Tribunal (UT) overturned the decision of the First Tier Tribunal (FTT), finding that the Club did have a reasonable excuse for issuing a zero-rating certificate. The Club had relied on misleading advice from HMRC, who it was thought, had incorrectly believed that the Club was a charity.

The Club was a Community Amateur Sports Club (CASC) which is not the same as a registered charity. 

Prior to the construction pavilion and sports hall, the Club wrote to HMRC to take advantage of certain zero-rating which are available for the construction of a building by a ‘charity’. HMRC replied with the usual disclaimer that it cannot give a ‘definitive response’ but mentioned that it appeared that the development qualified for the claimed relief.

The club issued a zero-rating certificate to the contractors undertaking the work.

HMRC subsequently issued a penalty charge for getting the zero-rating certificate wrong and the Club appealed to the FTT.

The FTT concluded that the Club did not have a reasonable excuse as the Club was not a registered charity and the letter from HMRC was not a definitive response.

The Club appealed to the UT and argued that it honestly believed that it was entitled to issue the certificate based on the following matters:

  • The Club was run by 'lay persons’ in matters of indirect taxation.
  • The Club exercised reasonable diligence by seeking advice from HMRC before issuing the zero-rating certificate. HMRC had advised that the construction work was zero-rated.
  • The Club acted reasonably in following that advice in issuing the certificate.

The UT noted that a CASC is 'a creature of statute' and not a charity. It considered that the FTT was wrong to approach the question of the reasonableness purely on a narrow approach of whether the HMRC letter contained definitive advice or not. Instead, the correct approach is to look at all the relevant circumstances bearing in mind that the Club was run by volunteers with little apparent expertise on indirect taxation and put the central question as to whether it was reasonable for the Club to have relied on what was said in HMRC's letter.

The UT overturned the decision of the FTT and has allowed the Club’s appeal on the basis it had an honest belief that the works qualified and the objective circumstances around that belief made it a reasonable one to hold based on the letter from HMRC.  

Useful guides for our subscribers

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.

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 [2021] UT 0023


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