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Rugby Club Charity Scores Clubhouse Tax Victory

View over rugby pitchA rugby club which was hit with a crushing VAT bill after building a new clubhouse is in line for a bumper rebate after a tribunal found that its use for socialising and recreation by the local community was akin to that of a village hall.

The club, a charity, had been planning the clubhouse on its rented playing fields for 20 years or more. It received various grants towards the £300,000 construction costs but club members worked hard to raise £95,000 themselves. However, HM Revenue and Customs (HMRC) refused to exempt the project from VAT.

In allowing the club’s appeal, the First-tier Tribunal noted the clubhouse’s use for a wide range of community activities. A dance school and a choir met there, as did a multiple sclerosis society and a community association for pre-school children. A running club used the changing rooms, a big band practiced there and a disability sports association used it for bowling nights.

Since the local town hall was converted into a museum, the clubhouse had become the focus for many social and fundraising events. Rugby fixtures were often moved to make way for prior bookings and the club’s members paid the same rates to hire the venue as everyone else.

The clubhouse was run on a non-commercial basis and, in those circumstances, the tribunal found that it was used as ‘a village hall or similarly’, within the meaning of the Value Added Tax Act 1994, and that its construction costs should have been zero-rated for VAT purposes.