Giving a grant from the CIL Budget

Question

The Parish Council is sole management trustee of village hall which is a registered charity. The village hall gets most of its capital expenditure as grants from either Parish Council or other bodies.  As most of this work is to the benefit of residents in maintaining the village hall and recreation grounds then it is appropriate to use CIL funds.  The Council would normally order, pay invoices, reclaim VAT and then gift the completed work to charity to ensure effective use of the CIL fund e.g. new children's playground. This net of VAT approach has become a precedent.  Now we have a new situation where a previous ( within the current year) project should have been a grant and funded by CIL; a new gate access and path to the recreation ground.  Some Councilors believe the council can only give a grant net of VAT to the charity because the money is coming from CIL budget line, others believe a request for a grant is a grant, up to the charity how it is spent. I need some advice on how to break the deadlock.

Answer 1

To break the deadlock you simply have a vote.

Which ever opinion receives the majority is what has to happen.  Doesn't mean it will be the correct course of action according to tax law but it seems to me that PCs can pretty much do what ever they like so long as it is a majority vote - there simply isn't the mechanism or will to challenge.

After a vote it becomes a corporate decision which could be questioned by internal / external audit (but is highly unlikely to be and even if it is would make no difference what so ever.)

Your biggest problem is HMRC, they will want their VAT and will care little about who pays it.  Those that are seeking to prevent the PC from paying the VAT on the grant will probably end up with the PC paying the VAT on the grant anyway if, as you seem to indicate, the VH has no sustainable bank balance of its own.

If the PC is the sole managing trust and the village hall gets all of it income from grants + PC, what does it really matter if the PC pays the VAT - if the VH doesn't have any funds it can't pay the VAT but HMRC will not care so long as their get their pie.

On a tangent, the bigger problem (IMHO) is a VH which (as I interpret from your post) is not managed as a going concern that can wipe its own face.  

It's all very well having initial build and significant upgrades from grant funding, but any entity must be able to pay its own way with receipts covering general running costs.  

Do the PC trustees of the VH have a credible business plan or do they simply rely upon the precept to balance the books?

Comments

Great, if you do not see any legal requirement favouring one route over the other then happy to put it to the vote.  The Village Hall is a going concern revenue-wise, its income just balances its revenue expenditure, but it is treading water, it has insufficient income to move forward with any development projects, and as they say in business if you are not moving forward then you are moving backwards. We need more emphasis on revenue generation.  Thanks again.

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Round Again - good point re the business plan, tho the council is the trustee, there are not any individual trustees.  Hence any business plan is one created by the clerk and voted on by the councillors?    I would also disagree that if a council votes on an issue it does not have the power to do it cannot be held to account.  Indeed the clerk can (and should) refuse to do it.  Decisions taken outwith its powers can be reversed and the powers to do this are though the courts (not through the code of conduct).  They can also be challenged through the internal and external auditor IMHO.

Answer 2

Hi   I would look at NALC LTN 21  - Local Help to Village Halls.  The Sections on VAT and Grant Aid look to cover your situation with a bit of interpretation. However what you normally do would seem to be OK with CiL monies looking at that guidance.