VAT - do you charge VAT of sports pavilion and pitches hire charges?

Question

Are there any tax experts in the house?

A complicated area I know I'm trying to find some details with references.

PC is VAT registered and reclaims VAT on purchases where appropriate.

Should such a PC then be charging VAT on invoices for rental of sports pitches, pavilion hire, allotments etc?

I'm currently checking through my accounting references and trying to find an answer - any experiences from the collective?

Answer 1

https://www.gov.uk/guidance/local-authorities-and-similar-bodies-notice-749#section2

just read this = but I'm still not sure I'm any clearer...

Answer 2

It's quite unusual for a parish council to be VAT registered as this implies business supplies which exceed the minimum for registration and there are few that meet that criteria.  However, the rules on VAT are so complex I'd recommend seeking advice from a properly qualified accountant who specialises in VAT rather than rely on this forum

Comments

It is quite usual for a PC to be reclaiming VAT on qualifying purchases - I'm happy with that part.

What I am trying to establish however is, should they also charge VAT on the hiring rates.

Just because it is complex doesn't mean it is impenetrable - I have previously successfully taken HMRC to Lower Tier Tribunal (and largely won the case) and then sought to achieve the remaining 30ish percent that I didn't win at Lower Tier by appealing to the Higher Tier at the Royal Courts of Justice.  That appeal judge wouldn't allow my appeal - it was a Herculean effort not to tell him he was an idiot - but I didn't fancy porridge!

Answer 3

We are VAT registered and opted to tax our sports pavilion following a £250k renovation. It allowed the council to claim back£50k of VAT otherwise we couldn't. So now we have to charge VAT on all our bookings and hirings.

Comments

I'm not sure what you mean by 'vacant' 50k?  Is that a typo??

You should read the link  I posted above, I am not at all convinced that you must charge VAT on not business activities - I am minded to believe that general power of competence may be a factor since a PC without it cannot be deemed to be carrying on a business.

Answer 4

You have a choice - and a further option.

The amount of VAT a Parish Council can reclaim without being registered is quite modest but may be enough for most, most of the time.

However, if you undertake a capital project with substantial VAT on the purchase, you  are unlikely to be able to reclaim all the VAT. Registering for VAT would allow you to reclaim all the VAT but does, as suggested, require you to charge VAT on your income.

If you are careful when you register you can opt selected facilities out of VAT so you do not have to charge VAT on those parts. In theory, if you were registering to reclaim VAT on a new sports pavilion, you could register but opt not to tax everything else, so the additional VAT is only charged on use of the pavilion and, you could even protect users from that increased cost by paying it yourself.