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Cricket club stumped by VAT dispute

Taxpayers across the UK will have begun to receive a simple assessment (form PA302) from HM Revenue & Customs (HMRC), which will ask for payment of tax that cannot be coded out under PAYE.

Despite the common misconception that charitable organisations are exempt from VAT, Eynsham Cricket Club was forced to pay 20 per cent VAT in respect of works to construct its new pavilion.

A ruling by a Tax Tribunal found that the club was liable for VAT on the cost of the builder’s services. As the club was not VAT registered, it could not reclaim the tax paid.

To be exempt from VAT, the club would need to be considered a charity, the building should be used for charitable purposes or, crucially, as a ‘village hall’ or similar and it would need to issue a certificate to the builder to confirm its exemption from VAT.

The club, as a Community Amateur Sports Club (CASC) said that, despite not being a registered charity, it should be treated as such because it aims to promote participation in sport. This argument was rejected by the Tribunal, meaning that VAT should be applied to the transaction.

When it comes to VAT it pays to get advice from a specialist to ensure that your actions are compliant with current legislation. Failing to meet the VAT rules could result in significant financial penalties and further investigations into your business or organisation.

LINK: Cricket club caught out in VAT dispute

For more information, contact Baines Jewitt on 01642 632032

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