*Update* The Upper Tribunal has now reached its decision – read more here.

The First-tier Tribunal (FTT) has released its decision in this appeal against a penalty issued by HMRC on the basis that Greenisland Football Club wrongly issued a zero-rated certificate to a contractor who supplied construction services to the Club in respect of a new clubhouse.

The Club is not VAT registered and is a not-for-profit community based sports club registered with the Northern Irish Charity Commission. In 2010 it began a project to build a new clubhouse which was to be a multipurpose facility for use by the community. Before the work commenced the Club issued a certificate to the builder that the building was intended for use solely for a relevant charitable purpose and therefore the contractor could zero-rate its supplies pursuant to item 2, group 5, Schedule 8 of VATA94.

After construction had been completed, HMRC looked at the VAT liability of the construction works and as a result of its investigations decided that the construction should have been standard rated.

In allowing the appeal, the FTT held that the clubhouse is used by many local groups with no preference being given to the Club’s activities or bookings. The Club does not operate a business at the clubhouse, which it operates in a manner similar to a village hall. Any cash generated is ploughed back into maintenance and the local community makes extensive use of the facilities. The FTT concluded that the supplies were zero-rated and the certificate was correct. The FTT also held that if this decision is wrong the Club would have a reasonable excuse for issuing the certificate and the penalty should be withdrawn.

The decision follows the outcome in the Caithness RFC VAT case.