Community Amateur Sports Clubs are not charities for VAT purposes
Eynsham Cricket Club appealed against a decision of the UK First and Upper Tribunals that it could not benefit from zero rating for the construction of its new cricket pavilion.
The Court of Appeal upheld the Tribunals’ decisions with the result that the Club has to suffer VAT on the construction costs.
This is a complex case in that it has generated lengthy discussions around the definition of charitable status and the relevance to charitable reliefs.
The upshot, however, is relatively simple that a CASC (Community Amateur Sports Club), in benefitting from light touch regulations compared to those relating to charities, could not, therefore, have full charitable status.
It is a common theme for VAT Practitioners that not-for-profit making bodies assume that they benefit from a raft of VAT concessions, some real and some imagined and it can be very difficult for suppliers to these entities to understand when they should and should not be charging VAT.
This places significant burden and risk on these suppliers.
On the flip side, VAT is a significant burden to organisations that do not benefit from the charity concessions but are unable to recover VAT charged to them, much like the CASC in this case.
The benefit of CASC status may have outweighed charity status when it was first decided but most likely VAT planning was not in the mix at the time.
This case is an important reminder both that charity VAT reliefs are very specific, such that not every entity which may have charitable objects can benefit, and that VAT should always be considered when any strategic decision is being contemplated.
For advice on VAT issues related to charities and not-for-profit organisations, please contact us.
Community Amateur Sports Clubs are not charities for VAT purposes
