Tag Archives: charity

VAT: The ECJ decides that bridge is NOT a sport

By   27 October 2017
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Latest from the courts

The English Bridge Union Limited (EBU) case

Further to my article on contract (or duplicate) bridge here which covered the Advocate General’s opinion that it could be considered a sport, the Court of Justice of the EU has ruled that it does not qualify as a sport and therefore certain supplies by The EBU are subject to UK VAT.

The court decided that “…the fact that an activity promotes physical and mental health is not, of itself, a sufficient element for it to be concluded that that activity is covered by the concept of ‘sport’ within the meaning of that same provision….

The fact that an activity promoting physical and mental well-being is practised competitively does not lead to a different conclusion. In fact, the Court has ruled that Article 132(1)(m) of Directive 2006/112 does not require, for it to be applicable, that the sporting activity be practised at a particular level, for example, at a professional level, or that the sporting activity at issue be practised in a particular way, namely in a regular or organised manner or in order to participate in sports competitions…

In that respect, it must also be noted that the competitive nature of an activity cannot, per se, be sufficient to establish its classification as a ‘sport’, failing any not negligible physical element.”

As my aged father has always said; it can only be sport if the players wear shorts and sweat…

He may not have been far off you know. I still have difficulty considering pub games as sport, but I am sure there will be many who think that darts and pool are indeed sport.  It is also interesting that, inter alia, HMRC consider; baton twirling, hovering (not “hoovering as I first read it) octopush, dragon boat racing and sombo as sport.

VAT: Extent of zero rating for a construction by a charity

By   9 October 2017
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Latest from the courts

In the First Tier Tribunal (FTT) case of The Trustees of Litton & Thorner Community Hall the issue was whether certain construction works were a completion of an initial build or whether they were an extension or an annex to a pre-existing building. And if an annex, whether it was capable of functioning independently from the existing building and whether there is a main access to the annex.

Background

The appellant began construction of a hall in 2008. It was intended that the hall would be available for a school to use and also for it to be available at for village use and other activities, such as by local youth clubs and a scout group. There was no dispute that the original construction was zero rated via VAT Act 1994, Schedule 8, Group 5, item 2  (The supply in the course of the construction of a building designed for a relevant charitable purpose).

A decision was made to install ground source heat pumps to feed the heating system. However the space occupied to accommodate the system meant that there was insufficient storage space in the hall. So at the time of construction, but before planning permission was obtained, it was decided with the builder that a steel joist should be incorporated within the east wall of the hall in order to facilitate the necessary support and access when the envisaged storage facility was added.  The additional planning permission was granted in November 2011, three years after building work commenced. The facility was eventually able to be used when work was completed in 2014. The delay was caused (not surprisingly) by funding issues. It was the VAT treatment of work relating to the addition of the storage area which was the subject of the appeal, with HMRC considering that it was either standard rated work to the building or was a standard rated extension to it.

Technical background

The provisions relevant to the appeal are VAT Act 1994, Schedule 8, Group 5, Notes 16 and 17. It is worthwhile taking a moment to consider these in their entirety:

Note 16

For the purpose of this Group, the construction of a building does not include

(a ) the conversion, reconstruction or alteration of an existing building; or

(b) any enlargement of, or extension to, an existing building except to the extent the enlargement or extension creates an additional dwelling or dwellings; or

(c) subject to Note (17) below, the construction of an annexe to an existing building.

Note 17

Note 16(c) above shall not apply where the whole or a part of an annexe is intended for use solely for a relevant charitable purpose and;

(a) the annexe is capable of functioning independently from the existing building; and

(b) the only access or where there is more than one means of access, the main access to:

(i) the annexe is not via the existing building; and

(ii) the existing building is not via the annexe.

The Appeal

The Trustees appealed on two separate and distinct bases:

(1) That the additional building was the completion of the original building and neither an extension nor an annex to it. It was their case that the temporal disconnect between the two building processes must be seen in the factual context, with particular reference to the decision to put in a lintel to allow the building to be completed when additional monies and planning permission were available. Additionally, alongside this fact was that the appellant was a non-commercial organisation and so things could not progress as expeditiously as they might have done if those things were being undertaken by a commercial organisation.

(2) The second basis is that, in any event, the additional building is zero rated by reference to paragraphs 16(c) and 17 of Group 5 to Schedule 8. It was the appellant’s case that the additional building is an annex intended for use solely for relevant charitable purposes and it meets the conditions set out in paragraph 17(a) & (b).

Decision

The FTT decided that the work was subject to zero rating. Not only was it part of the original construction (albeit that there was a significant time period between the building original work and the work on the storage area) but also, even if the storage area is considered as being separate, it was ruled that, on the facts, it was an annex rather than an extension, so it also qualified for zero rating on this basis.

Commentary

The date a building is “completed” is often an issue which creates significant disputes with HMRC, not only for charities, but for “regular” housebuilders. I have also encountered the distinction between an annex and an extension representing a very real topic, especially with academy schools. Even small changes in circumstances can create differing VAT outcomes. My advice is to seek assistance form a VAT consultant at the earliest stage possible. It may be that with a slight amendment to plans, zero rating may be obtained in order to avoid an extra 20% on building costs which charities, more often than not, are unable to reclaim.

Links to what we can offer to schools here, and charities here

Additionally, our offering to the construction industry here

VAT: Latest from the courts – extent of education exemption

By   7 August 2017
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In the case of SAE Education Ltd (SAE) at the Court of Appeal, the court was required to decide on whether the exemption for education services extended to a “Special Associate College”.

Background

At the relevant time here was relationship between SAE and Middlesex University which has existed since 1998 when the first Memorandum of Co-operation was signed.  This was a contractual document which provided for certain BA courses to be taught by SAE at specified campuses as “validated collaborative programs” of the university. Subsequently the university and SAE entered into further Memoranda of Co-operation which replaced the earlier agreement and provided for the validation of additional courses. Tuition was provided by SAE subject to quality assurance safeguards. SAE provided library, computer and other facilities but SAE students would not normally be entitled to access or use of the university’s Learning and Resource Services unless negotiated at extra cost. Nor were they to be entitled to access university’s accommodation and other social welfare services or to apply for financial support from the University’s Access to Learning Fund. They were however, entitled to access the university’s Disability Support Services but again at an additional cost.

In 2010 a decision by the university to grant SAE accredited status was made. This meant that SAE was accredited to validate, monitor and review courses of study leading to university undergraduate awards in certain subjects. This gave SAE the ability to validate the specified programmes itself (although Middlesex University staff continued to be involved in the assessment of the programmes).

The issue

SAE claimed that its supplies were exempt on the basis that it was a college of Middlesex University and therefore an “eligible body” (see below) and that the services supplied were educational as the university outsourced certain courses to it.

HMRC disagreed and assessed for output tax on the appellant’s services on the basis that exemption did not apply and the supplies were standard rated.

Legislation

The relevant legislation: VAT Act 1994, Schedule 9, Group 6, item 1 insists that in order for exemption to apply the provision of education (inter alia) must be by an “eligible body”. The matter to be considered therefore was; is SAE Education Ltd an eligible body. An “Eligible body” is defined in Note (1). It includes a long list of different types of school and higher education establishments but the appeal concerned paragraph (b): “a United Kingdom university, and any college, institution, school or hall of such a university;”

Decision

So was the appellant a UK university, college, instruction, school or hall of such a university?  The judges concluded that it was not.

It was decided that although Middlesex University outsourced certain courses to it, and that SAE  was appointed as a Special Associate College,  this fell short of making it a college in a constitutional or structural sense. In their view a college means entities which are a constituent part of an university. The example given was of Cambridge and Oxford colleges which have been organised for centuries on a federal system under which the colleges and private halls, although legally independent and self-governing, have provided the students of the university and have assumed the primary responsibility for their tuition. The universities themselves are corporations and are regulated by statute with their own separate legal identity and status. “The colleges and private halls are therefore an integral part of the structure of the university and their members make up the university’s teaching staff and students.”

Commentary

It would appear that as a result of the approach in this case, the exemption for education may be more restrictive than previously understood. It is vital that providers of education review their VAT status as soon as possible.  I would advise that a VAT consultant is used because this is an area where small details may affect the VAT treatment of the services. The ruling in this case is not helpful.

VAT: Latest from the courts – extent of exemption for financial services

By   5 July 2017
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Coinstar Limited

In the Upper Tribunal (UT) case of Coinstar Limited the issue was whether the services Coinstar provided were exempt supply of financial services via Value Added Tax Act 1994, Schedule 9, Group 5, item 1 – “The issue, transfer or receipt of, or any dealing with, money, any security for money or any note or order for the payment of money.”

Background

I’ve no doubt that you’ve seen those kiosks with machines in supermarkets into you which you tip your bag full of loose change in return for a voucher.  The voucher can then be redeemed at the checkout against the supermarket bill. Coinstar provides this service and charges 9.9% of the value of the coins inserted into the machine.  HMRC considered this to be a table service of “coin counting”, while Coinstar claimed that it was an exempt supply under the above legislation.

Decision

The UT affirmed the decision of the First Tier Tribunal and dismissed HMRC’s appeal, ruling that Coinstar was providing an exempt financial service. The Transaction was not a coin counting service, but a service of exchanging a less convenient means of exchange into a more convenient one which was provided in return for the 9.9% fee.  This involved a change in the legal and financial status of the parties such that the exemption applied.

Commentary

Another case which demonstrates the fine line between exemption and taxable treatment of “financial” services.  HMRC’s argument here was that this was a single supply of coin counting (which is outside the exemption) but clearly, a person emptying their big pots of change into the machine did not want it to be simply counted, the aim was to obtain a voucher in return for the shrapnel (or, if feeling philanthropic, there is an option to donate the coins to charity – for which Coinstar made no charge). It is fair to observe that just because a supply may be “financial” in nature it is not automatically exempt.  It pays to check the liability of such services because, as may be seen, HMRC often attack exempt treatment.  I have recently had to untangle a position where there was doubt about whether an online service amounted to exempt intermediary service. HMRC ultimately agreed that exemption applied in this case, but that was not their starting point.

VAT – Extent of healthcare exemption. Latest from the courts

By   26 June 2017
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In the First Tier Tribunal (FTT) the case of The Learning Centre (Romford) Ltd (TLC)  the exemption for healthcare was considered.

Background

The appellant provides day-care to vulnerable adults with learning difficulties (referred to as students). Both directors have relevant qualifications and a great deal of experience in providing the care which the company provides. The taxpayer provided their students with education, activities, and entertainment during working hours Monday to Friday, providing meals and, where required, assistance with eating, administering medication, and personal care. They also provided the transport to bring the students to and from their homes and the facility. The education provided was geared towards teaching the students independent living.

While HMRC accepted that what the appellant provided was ‘welfare services’ within the meaning of the Value Added Tax Act 1994, Schedule 9, Group 7 Item 9 and Note (6), exemption applied only where it was supplied by a specified type of entity. Those entities are:

1) A charity

2) A state-regulated private welfare institution or agency, or

3) A public body.

The appellant was not a charity: it was a company which ran the business for profit. As a privately owned company, it was not a public body either. The only possible category for the appellant was ‘a state-regulated private welfare institution or agency’ and HMRC did not accept that the appellant fell within that category.  Day-care is not regulated in England and as a consequence HMRC decided it is not covered by the exemption.

Decision

The FTT found for the appellant. It was noted that day-care is regulated in Scotland and it would be a breach of fiscal neutrality if the VAT treatment of day-care was different North and South of the border.  TLC could rely on the direct effect of the Principal VAT Directive and, as a consequence, could treat its supplies as exempt and deregister from VAT.

Commentary

It was a logical decision, however, logic does not always play a part in VAT…. It sought to level a playing field that was far from that.  If the decision had been in favour of HMRC the VAT treatment would have been different if the supply had been made:

  • in other areas of the UK
  • by the Local Authority
  • by a charity

contrary to EC law.

There are many businesses which provide similar services and it is imperative that they review their VAT position immediately. We can assist with this.

VAT: Is the card game bridge a sport?

By   21 June 2017
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Latest from the courts: Advocate General’s (AG) opinion* on the English Bridge Union (EBU) case.

Certain supplies of services closely connected to sport are exempt from VAT.  Consequently the EBU (a non‐profit making membership‐ funded organisation committed to promoting the game of duplicate bridge) appealed to the ECJ wanting certain fees paid to it to be exempt.  HMRC consider that contract bridge is not a sport so that output tax was due on the supply.  This view was supported by the First Tier and Upper Tribunals. So, the simple question is: Is bridge a sport?  The ECJ hearing has come about due to a referral from the British courts in reference to how it should be applied to bridge.

The AG has looked at how the term “sport” should be defined.  As a starting point, it is clear that games such as football, cricket, tennis and squash are sport.  However, this does not mean that activities which are less strenuous cannot be a sport, and the examples of archery and badminton were given.  The AG was also of the view that sport does not need to include any physical element, meaning that any activity which is characterised by:

  • competition
  • an effort to overcome a challenge or obstacle
  • results in physical or mental wellbeing

may qualify as a sport.

In connection with contract bridge; as a card game it:

  • is dependent on skill and training rather than luck
  • requires considerable mental effort and training to compete at an international level
  • is recognised by the International Olympic Committee as a sport

such that the AG concluded that bridge can indeed be defined as a sport.

This, if followed by the ECJ, means that the EBU will be due a refund of output tax declared on competition entry fees charged to its members.

The EBU has always maintained that bridge is a sport and point to the UK Charity Commission which recognises bridge as a sport.  It adopted Parliament’s most recent definition in the Charities Act, updated by Parliament in 2011, which specifically included Mind Sports in the definition of ‘sport’, stating that sports are “activities which promote health or wellbeing through physical or mental skill or exertion”.  Additionally, bridge is seen as an excellent way of improving mental acuity and delaying the onset of dementia, and the social and partnership aspects of bridge are of great benefit to those who may otherwise become isolated.

We now await the court’s decision on whether one needs to wear shorts and get sweaty to be participating in sport.

*  The most important work performed by the Advocates General is to deliver a written Opinion, named “reasoned submission”. The role of the Advocate General is to propose an independent legal solution. It is important to note that the Court is not obligated to follow the Opinion delivered by the Advocate General. Even though the Opinion does not bind the Court it has an impact on the decision in many cases, and in fact, in most cases the ECJ follows it.

VAT Latest from the courts – Reverse Charge

By   13 February 2017
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The First Tier Tribunal case of University Of Newcastle Upon Tyne is a useful reminder of the impact of the Reverse Charge.

A brief guide to the Reverse Charge is included below.

Background

As with many UK universities, Newcastle was keen to encourage applications to study from new students from overseas. This is an important form of income for the institution.  It used local (overseas) agents to recruit students. Some 40% of those students were studying as undergraduates, 40% as postgraduates on one year “taught” courses and 20% as postgraduate research students studying for doctorates.  In 2014 the University had agreements with more than 100 agents worldwide. The agents used their own resources to recruit students for universities around the world, including in the UK. The University entered into contractual arrangements with agents and paid commission to them. In 2008 the University paid agent commissions of £1.034m, rising to £2.214m in 2012.

The Tribunal was required to consider whether the services supplied by the agents were a single supply to University or separate supplies to both the University and students. If the entire supply is to the University then the Reverse Charge is applicable and, because the University is partly exempt, this would create a VAT cost to it. If the supplies are to both the students and the University, the Reverse Charge element would be less and the VAT cost reduced. (There were changes to the Place Of Supply legislation during the period under consideration, but I have tried to focus on the overall impact in this article.)

The University contended that agents made two supplies: a supply to the University of recruitment services and a supply to students of support services. The commission paid by the University should therefore be apportioned so as to reflect in part direct consideration paid by the University for supplies of services to it, and in part third party consideration for services supplied to the students. The supplies to students would not made in the UK and therefore were not subject to UK VAT.

Decision

After thorough consideration of all of the relevant material, the judge decided that the agents made a single supply of services to the University and make no supplies to students. This meant that the University must account for VAT on the full value of services received since 2010 under the Reverse Charge (although before 2010 different rules on place of supply applied).  Additionally,  it was decided the University was not entitled to recover as input tax VAT for which it is required to account by means of a Reverse Charge. There was no direct and immediate link between the commission paid to agents and any taxable output of the University or the economic activities of the University as a whole.

Commentary

It is understood that the way the University recruited students using overseas agents is common amongst most Universities in the UK, so this ruling will have a direct impact on them.  It was hardly a surprising decision, but underlines the need for all businesses to consider the impact of the application of the Reverse Charge.  Of course, the Reverse Charge will only create an actual VAT cost if a business is partly exempt, or involved in non-business activities.  The value of the Reverse Charge also counts towards the VAT registration threshold.  This means that if a fully exempt business receives Reverse Charge services from abroad, it may be required to VAT register (depending on value). Generally, this means an increased VAT cost. This situation may also affect a charity or a NFP entity.

The case also highlights the importance of contracts, documentation and website wording (should any more reminders be needed).  VAT should always be borne in mind when entering into similar arrangements. It may also be possible to structure arrangements to avoid or mitigate VAT costs if carried out at an appropriate time.

We can assist with any of the above and are happy to discuss this with you.

Guide – Reverse charge on services received from overseas
Normally, the supplier of a service is the person who must account to the tax authorities for any VAT due on the supply.  However, in certain situations, the position is reversed and it is the customer who must account for any VAT due.  This is known as the ‘Reverse Charge’ procedure.  Generally, the Reverse Charge must be applied to services which are received by a business in the UK VAT free from overseas. 
Accounting for VAT and recovery of input tax.
Where the Reverse Charge procedure applies, the recipient of the services must act as both the supplier and the recipient of the services.  On the same VAT return, the recipient must
  • account for output tax, calculated on the full value of the supply received, in Box 1;
  • (subject to partial exemption and non-business rules) include the VAT stated in box 1 as input tax in Box 4; and;
  • include the full value of the supply in both Boxes 6 and 7.
Value of supply.
The value of the deemed supply is to be taken to be the consideration in money for which the services were in fact supplied or, where the consideration did not consist or not wholly consist of money, such amount in money as is equivalent to that consideration.  The consideration payable to the overseas supplier for the services excludes UK VAT but includes any taxes levied abroad.
Time of supply.
The time of supply of such services is the date the supplies are paid for or, if the consideration is not in money, the last day of the VAT period in which the services are performed.
The outcome
The effect of the provisions is that the Reverse Charge has no net cost to the recipient if he can attribute the input tax to taxable supplies and can therefore reclaim it in full. If he cannot, the effect is to put him in the same position as if had received the supply from a UK supplier rather than from one outside the UK. Thus the charge aims to avoid cross border VAT rate shopping. It is not possible to attribute the input tax created directly to the deemed (taxable) supply. 

VAT Latest from the courts – exemption for sporting facilities by an eligible body

By   8 November 2016
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St Andrew’s College, Bradfield

This Upper Tribunal case demonstrates the importance of getting the structure right. Full case here

Overview

Exemption exists for an eligible body making certain supplies of sporting services.

Background

St Andrew’s College is a boarding school and a registered charity.  It is the representative member of a VAT group which also included two subsidiary companies. The companies provided facilities for playing sport and the group intended to treat these as exempt supplies.  HMRC challenged the intended treatment on the basis that the subsidiaries did not qualify as eligible bodies via VAT Act 1994, Schedule 9, Group 10 (exemption related to sport, sports competitions and physical education). It was agreed that all of the other criteria were met, so the case turned on the definition of an eligible body.  It was common ground that the College, as an educational charity, was itself an eligible body. Even though, as the representative member of the VAT group, the College was treated as making all supplies actually made by the subsidiaries, that did not mean that the supplies were exempt.

Decision

In order to be regarded as an eligible body the subsidiaries were required to be a non-profit making body.  What was relevant here was whether the subsidiaries (themselves) had specific restrictions on their ability to distribute any profit that they made.  The UT formed the view that there was no specific restriction and that although profits were only covenanted up to the College this was insufficient to meet the test in Group 10 Note (2A).  It was also found that the deeds of covenant did not, of themselves, establish that the subsidiaries could make distributions only to non-profit making bodies.

Consequently, the subsidiaries failed to qualify for exemption and that the First Tier Tribunal correctly found that output tax was due on the income from provision of sporting facilities.

Commentary

This case highlights the importance of putting in place a correct structure and to ensure that it reflects the intention of the supplier.  One may see that in this scenario it would have been relatively simple to arrange matters to accurately reflect the aims of the group.  Care would have been required in drafting documentation etc as matters stood, or rearranging the supply chain.

It should also be noted that there are specific anti-avoidance provisions in place for certain suppliers of sporting services (although not in issue here). Advice should be taken at an early stage in planning to ensure that if exemption is desired, that it is achieved if possible.

VAT – Latest from the courts: Craft fair pitches standard rated

By   17 October 2016
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The Upper Tribunal (UT) case of Zombory-Moldovan (trading as Craft Carnival)

Background

In the past, the rent of stall at craft fairs have generally been treated as an exempt right over land. In fact, in this instant case, the First Tier Tribunal agreed with the appellant that supplies made to stallholders to sell their goods were the equivalent to a right to occupy land and therefore exempt from VAT.

However, in this decision, the UT overturned this analysis and found that the supply was standard rated.

Decision

The reasons given were that what Craft Carnival supplied went beyond the mere use of a plot of land for a specific period and amounted to the use of a pitch at an event in order to “offer certain goods for sale”.  The test in the previous “Temco” case on this point stated that an exempt supply amounts to a “relatively passive activity linked simply to the passage of time and not generating any significant added value”.  Craft Carnivals had “very real and significant responsibilities beyond the bare provision of an appropriately-sized plot”. This, being a single supply (it was decided) meant that the entire charge was subject to VAT at the standard rate.

The appellant’s website stated that “In addition to the erection of marquees, which are hired for the duration of a fair, Mrs Zombory-Moldovan arranges for the provision 45 of other necessary temporary facilities including portable toilets, electrical generators and security fencing. She also employs between five and seven members of staff to act as ticket sellers and car park 3 marshals. Before the fair takes place Mrs Zombory-Moldovan would have issued a press release and advertised the event in local newspapers and on Craft Carnival’s website and booked a children’s entertainer, such as a magician, to encourage families to attend.”

Impact

Any business or charity which provides similar supplies must review their VAT responsibilities in light of this decision immediately. This case is likely have far-reaching implications for both organisers and those businesses which sell goods in fairs and similar events.  This may encompass; trade fairs, exhibitions and even, possibly, high end car-boot sales type events. We await HMRC’s response to their victory in this case and how wide-ranging they consider the decision to be.

Please contact us if this decision affects your or your client’s businesses.

VAT Latest from the courts – what is an economic activity by a charity?

By   5 September 2016
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In the VAT case of Longridge on the Thames (Longbridge) here the Court of Appeal considered previous decisions at the First Tier Tribunal (FTT) and Upper Tribunal (UT) on whether Longbridge carried on an economic activity. This is an important case as it goes some way in determining the meaning of “business” in light of the term “economic activity” used in EC legislation.  The term “business” is only used in UK legislation, The Principal VAT Directive refers to “economic activity” rather than business, and since UK domestic legislation must conform to the Directive both terms must be seen as having the same meaning.  Since the very first days of VAT there have been disagreements over what constitutes a “business”. I have previously commented on this matter here 

Background

Longbridge is a charity. It uses volunteers to provide boating activities (mainly to young people) on the Thames. The fees charged by Longbridge were often at below cost and the charity relied on donations to continue its operations. It constructed a new building and sought VAT zero rating of these costs on the basis that the building was to be used for non-business purposes. Consequently, it was crucial to the relief claimed that the charity was not carrying out a business in VAT terms.  The FTT and the UT found that the charity’s “predominant concern” was not to make supplies for a consideration and therefore it was not in business. These findings were based on long standing case law, the most salient being; Lord Fisher and Morrison’s Academy Boarding Houses Association. Lord Fisher set out a series of tests which HMRC rely on to determine whether a business exists – considered here and here 

Decision

The Court of Appeal allowed HMRC’s appeal.  It decided that Longridge was carrying on an economic activity and therefore the construction of the new building could not be zero rated.  The decision is worth considering in full, however, the court held that there was a “direct link” between the fees paid and service the recipients received, even if it was subsidised in certain instances and that Longbridge was furthering its charitable objectives.  The requirement for a direct link was clearly demonstrated in The Apple and Pear Development Council case. The establishment of the direct link meant that Longridge was carrying in business (in UK law).

Commentary

The important test for whether an economic activity is being carried on is now; the direct link between payment and service. There is no longer the requirement to consider the test of “predominant concern” and in fact it was stated in the decision by the judges that this test is “unhelpful and may be misleading.” We must now ignore; the motive of the provider of the service, its status as a charity, the amount charged, whether subsidies are received by the charity, and whether volunteers are involved in the relevant activities.

This is a very big change in the analysis of whether a business exists and basically means that previous cases on this matter were wrongly decided.  It brings the UK into line with the EC on the definition of an economic activity and therefore provides clarity on this matter – which has long been an area which has desperately required it.

It means that, unless the decision is reversed at the Supreme Court, we say goodbye to the unloved Lord Fisher tests. However, this may be very bad news for charities and not for profit entities that have relied on these tests to avoid VAT registration and charging VAT on their supplies.  It is likely that many more charities will be dragged into the VAT net.  It remains to be seen whether this case will trigger a renewed targeting effort on charities by HMRC, but what is clear is that charities need to be conscious of this new turn of events and consider their position.  We strongly recommend that any bodies which have had previous discussions with HMRC on this point and any entity which is affected by this decision take professional advice immediately.