This case was about the development of a sports and leisure hall and the charity claimed that it qualified as “similar to a village hall” for VAT purposes and so they should get zero-rating on all construction works. The charity had a membership scheme in operation for sports activities, and the premises were also used for other activities. The VAT office claimed it was a members’ sports club and therefore not eligible for zero-rating. The charity won and got the building works zero-rated.

A sports centre in Covent Garden was established to provide recreation in the area of Greater London in the interest of social welfare for the benefit of the local community. In fact, the people who used the centre were people who worked in the area as well as residents and the centre was operated on a commercial basis. The Centre wished to claim zero-rating for refurbishment work to the premises, which were in a listed building, on the grounds that it was used as a village hall or similar in providing social or recreational facilities for a local community and therefore qualified for relevant charitable use. They lost the case and had to pay VAT on the works.

The tax and VAT implications involved in resourcing a community building can be a complex area and it is recommended that any organisation considering such an enterprise should seek professional advice.