United Kingdom VAT & Duties Tribunals Decisions

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Cite as: [2007] UKVAT V20126

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Hanbury Charity v Revenue & Customs [2007] UKVAT V20126 (17 April 2007)

20126

VAT — ZERO RATING — supply of construction services to a charity for a relevant charitable purpose – whether the community hall used as a village hall—– yes — whether the Appellant intended to use the community hall as a village hall — yes — construction services supplied for a relevant charitable purpose — appeal allowed in principle

MANCHESTER TRIBUNAL CENTRE

HANBURY CHARITY Appellant

- and -

HER MAJESTY'S REVENUE and CUSTOMS Respondents

Tribunal: MICHAEL TILDESLEY OBE (Chairman)

MOHAMED FAROOQ (Member)

Sitting in public in Birmingham on 23 February 2007

David Holyland of Berry & Co, Chartered Accountants for the Appellant

James Puzey, counsel instructed by the Acting Solicitor for HM Revenue & Customs, for the Respondents

© CROWN COPYRIGHT 2007

DECISION

The Appeal

1. The Appellant was appealing against the decision of the Respondents that a supply of services for constructing a community hall should be standard rated for the purposes of VAT.

The Dispute

2. The Appellant was a registered charity founded by Reverend Hanbury to promote education in the villages and parishes of Church Langton, East Langton, Thorpe Langton, Tur Langton and West Langton collectively known as the "Langtons". The five "Langton" villages are located in south Leicestershire strung out along the crest of a little range of hills between Kibworth and Welham. The current population of the "Langtons" is about one thousand persons. The dispute concerned the building of a community hall in Church Langton which is regarded as the capital of the "Langtons".
3. The community hall comprised two separate and distinct parts. The first part comprised a nursery for young children. The parties agreed that the construction services for the nursery were standard rated VAT supplies. The parties disagreed about the VAT treatment of the second part which purportedly was being used as a village hall.
4. The Appellant contended that the supply of services for the construction of disputed part of the community hall was zero-rated in accordance with item 2 of group 5 schedule 8 of the VATA 1994. The hall was being used as a village hall which fell within the definition of a relevant charitable purpose
5. The principal difference between the parties was not whether the hall was a village hall but whether the hall was used by the Appellant as a village hall. The Respondents relied on the fact that the Appellant's charitable objects were educational. The Appellant was not authorised within its charitable scheme to run a village hall. Thus the supply was not for a relevant charitable purpose because it was made to the Appellant which could not use the building as a village hall. The Appellant submitted that use should be examined in the context of the intended use of the building not whether the Appellant could use it as a village hall. Thus as that part of the community hall was being used as a village hall, the supply of construction services to the Appellant was zero-rated.
6. The dispute started with a letter from the Appellant's representatives on 27 August 2004. Since that date the Appellant has refined its proposals as the project developed with the result the Respondents have made several decisions on the Appellant's refinements. In the exchanges of correspondence the Respondents informed the Appellant's representatives that they were not allowed to give tax planning advice. The Appellant appealed against the Respondents' decision of 16 March 2006 but the Appellant's representative continued to put forward arguments for zero rating to which the Respondents responded with their last response dated 16 January 2007. During the ongoing dispute the building of the community hall was completed in March 2006.
7. The moving nature of the dispute and the opening of the community hall posed questions about the scope of our decision. We confined our decision to whether the supply to the Appellant in the course of construction of a building was intended for use solely for a relevant charitable purpose. We have based our decision on the found facts known as at the date of the hearing. We have not considered the issues of the certificate (note 12(b) item 2 group 5 schedule 8) and apportionment (note 11), which are matters dependent upon the outcome of our decision on the principal disputed issue.

The Evidence

8. We heard evidence on oath from Mr Derek Hewitt, Chairman of the Trustees to the Appellant charity. The Appellant provided a statement of agreed facts. We received a bundle of documents from the Respondents.
9. The Chairman declared that he knew of the geographical location of the Appellant charity but he had no connection with and no knowledge of the charity and its trustees.

The Facts Found

10. The Appellant was a registered charity founded in the 19^th century by the Reverend Hanbury, a former Rector of Church Langton. The charity was known as the Hanbury Foundation which was regulated by a scheme dated 11 May 1895. A separate charity called the Hanbury Educational Foundation was constituted by an order made by the Charity Commissioners in 1905. The current scheme which regulated both charities was dated 4 November 1992.
11. The principal object of the charity was to promote education in the "Langtons" which it carried out by assisting the Governors of Church Langton Church of England Primary School to discharge their obligations under the Education Acts, providing the school with special benefits and giving financial assistance for the education of persons under 25 from the "Langtons" and neighbouring parishes.
12. The subsidiary objects of the Appellant charity were to relieve need and sickness of the Langtons' residents and pay the salaries of the organists for the churches at Church Langton, Thorpe Langton and Tur Langton. The objects did not include promoting the social and recreational needs of the local community.
13. The trustees consisted of one ex-officio trustee (the rector of St Peter Langton church), six nominated trustees and three co-opted trustees. Leicestershire County Council nominated two trustees with one trustee being nominated by each of the four parish meetings for the parishes of East Langton, Thorpe Langton, Tur Langton and West Langton. Mr Hewitt stated that the co-opted trustees as a rule lived in the "Langtons" or the neighbouring parishes.
14. The assets of the Appellant charity included land in Church Langton upon which the Church of England primary school was situated and run by Leicestershire County Council in accordance with the terms of the charity. Also included on that land were two buildings which had fallen into disuse following the closure of the secondary modern school in the 1960's, and a structure known as the "HORSA" building which was jointly used as a kindergarten run independently from the charity and as a village hall for the "Langtons" community. According to Mr Hewitt in 1921 the charity built a library with a meeting room for the community. The "HORSA" building absorbed those community facilities when the library was taken over by the primary school.
15. The Appellant decided to sell that parcel of land upon which the two disused buildings and the HORSA structure were situated for redevelopment to raise funds for the charity. The Leicester Diocesan Board of Education had been responsible for the maintenance of the disused buildings when they were being used for educational purposes. As a result of their interest the Diocesan Board was entitled to an order under section 554 of the Education Act 1996 which vested the beneficial ownership of the parcel of land marked for redevelopment with the Diocesan Board. The section 554 order was made on 11 January 2005.
16. The redevelopment scheme comprised two lots. Lot One involved the renovation of the old school buildings for which the Appellant obtained planning permission at the end of 2003. Lot two consisted of the erection of four new dwellings which involved the demolition of the HORSA structure.
17. During the public consultation on lot 2 Canon Taylor of the Leicester Diocesan Board of Education undertook to replace the facilities provided by the HORSA structure with a new community centre. On 28 October 2004 the Appellant obtained planning permission for the erection of the four buildings and the demolition of the HORSA structure. The permission was subject to conditions, one of which was:

"no demolition shall take place until the new (our italics) community hall and car park is completely constructed and available for use by the public"

The reason given for the above condition was

"to ensure the proceeds from the sale of the four housing plots go to the construction of the community hall".

18. On the 16 August 2004 the Appellant gained planning consent for the erection of a community centre including a nursery and associated car park on other land owned by the Appellant outside the parcel marked for redevelopment. The inclusion of the nursery was at the behest of the local planning authority which insisted upon this facility as part of the community centre not as a separate building.
19. In November 2004 the Appellant and the Leicester Diocesan Board of Education accepted an offer of £2,288,800 from Enterprise Heritage Capital 11 LLP for the two lots which was divided £1,428,800 for lot one and £860,000 for lot two.
20. The section 554 order transferred the ownership of the charity land marked for re-development to the Leicester Diocesan Board of Education. Under the terms of the order the proceeds from lot one were distributed 60 per cent to the Board and 40 per cent to the Appellant provided the Appellant constructed the new community centre on its land. As part of the agreement the Board gave the proceeds from lot 2 to the Appellant for the sole purpose of building the community centre.
21. The sale of the two lots was completed on 21 June 2005. The sales contract included an undertaking by the Appellant to provide a new community centre for use by the public before 31 December 2005.
22. The Appellant entered into a contract with Messrs Watson & Cox of Wellingborough for the construction of the community centre for an estimated cost of £647,000 plus associated professional fees for civil engineers, surveyors and architects in the sum of £75,000. The Appellant also incurred £7,000 for fittings not included in the construction contract. The building was completed in March 2006. The end construction costs have still to be ascertained.
23. The final design of the community centre was a single storey building with a pitched roof. The building comprised a self contained nursery unit with its own means of access. The nursery unit occupied about 20 per cent of the ground floor area of the building. The community centre part of the building contained a large hall which could be used for a range of purposes, two meeting rooms, kitchen, store rooms and toilets. The signage for the building was "Village Community Hall".
24. The Appellant originally intended to lease the community hall to East Langton Parish Council so that the council would be responsible for running the hall. The parish council was unable to take the lease but undertook to facilitate the formation of a management committee independent of the parish council and the charity comprising local residents to run the hall. The parish council advised the Appellant that it would invite nominations for the committee by adverts in the Kibworth Chronicle, the Langtonian magazine and on all parish notice boards in the area. The parish council also supplied the draft constitution for the hall management committee.
25. The draft constitution stated that

"The purpose of the management committee is to use its best endeavours to maintain and properly manage the village hall as a resource capable of catering for many of the social leisure and educational needs of the community to a high level of excellence".

"The inaugural committee shall be constituted of seven people".

"The committee shall at all times include no more than one of the trustees of Hanbury Charity and no more than one member of the East Langton Parish Council".

"The remaining members of the Committee shall be elected on an annual basis at the Annual General meeting with existing members being eligible for re-election. Those entitled to participate in the election shall be all the adult residents of the five villages of the Langtons on the basis of one vote per resident"

26. A hall management committee of local residents including some trustees of the Appellant charity has been formed. The Chair of committee was a non-trustee resident A member of the committee acts as secretary with responsibility for bookings. Since its opening in March 2006 the hall had been used for after school club, parents and toddlers group, music tuition, French tuition, ballet examinations, fencing club, art exhibition, meetings of the local conservative association, conference for Gartree synod, memorial concert for a local resident, numerous birthday parties, Christmas celebrations, weddings and a community events 80's night. Mr Hewitt confirmed that the primary school received no preferential treatment for its use of the hall. The school paid the same rates as any other user of the hall. The school predominantly used the hall for music lessons which in terms of revenue constituted about ten per cent of the total income of the hall. The after school club and the French tuition were organised by individual businesses which were not connected with the school.
27. The Respondents conceded at the hearing that the present use of the community hall matched the multi-purpose use characteristic of village halls.
28. The management committee retained the income derived from the lettings of the hall which amounted to £6,000 for the period March 2006 to January 2007. The committee engaged a self employed caretaker to look after the building. The Appellant derived no income from the hall except from the lease with the nursery which was not the subject of the Appeal. The accounts of the hall committee were still, however, included within the Appellant's accounts. The Appellant was exploring options with the Charity Commissioners to secure a complete separation of the Appellant from the management of the hall. The favoured option was to establish a separate charity to which the Appellant would grant a lease of the hall at a peppercorn rent but retaining the reversionary interest. Mr Hewitt explained that it took time to divest the community hall from the charity. The Appellant was working closely with the Charity Commissioners to find the correct solution.
29. Mr Hewitt confirmed that the VAT recovered on the construction costs would form part of the funds for the hall management committee. Further the Appellant was not acting outside its charitable scheme by paying for the construction of the hall. The income for the construction costs had been given to the Appellant by the Diocesan Board for the specific purpose of building the community hall.
30. We make the following findings of fact:

(1) The supply of services for the construction of the community hall was made to the Appellant, a registered charity.

(2) The principal charitable object of the Appellant was the promotion of education within the "Langtons".

(3) The Appellant did not have a charitable object of providing social and recreational facilities for the local community.

(4) The Trustees for the Appellant charity were on the whole residents of the "Langtons".

(5) The Appellant decided to sell some of its land to raise much needed funds for the charity. The Leicester Diocesan Board of Education assumed beneficial ownership of the land by virtue of a section 554 Education Act order, which split the sale proceeds between the Board and the Appellant charity.

(6) During consultation with the local community about the proposed sale and development of the land the Leicester Diocesan Board of Education undertook to replace the existing community hall and nursery which was situated on the land.

(7) The Appellant agreed to arrange for the construction of the community hall on its land in order to obtain the benefit of a share of the proceeds from the sale of lot one.

(8) The proceeds from the sale of lot 2 were given to the Appellant from the Leicester Diocesan Board of Education for the sole purpose of constructing the community hall.

(9) The building of a new community hall was a condition of the planning consent for the erection of four dwellings and the demolition of HORSA (lot two).

(10) The community hall replaced a previous facility for the local community which had been provided by the Appellant charity in 1921.

(11) The community hall included a self contained nursery unit with its own access. The supply of construction services for the nursery was standard rated for VAT purposes.

(12) The design of the community hall followed that of a typical village hall, in that it had a large hall capable of a variety of uses, two meeting rooms and a kitchen.

(13) The use made of the community hall since it opened matched the multi-purpose use by the local community characteristic of village halls.

(14) The local primary school for which the Appellant had responsibility did not have preferential treatment over other potential users of the village hall. The letting rate for the school was the same as for other uses. The lettings to the school accounted for about 10 per cent of the receipts from lettings of the hall in the period March 2006 to January 2007.

(15) The Appellant with the local parish council facilitated the setting up of an independent management committee consisting of local residents to run the community hall.

(16) The management committee controlled the income and expenditure for the community hall.

(17) The Appellant intended to create a separate charity for the community hall to which it would lease the hall at a peppercorn rent whilst retaining the reversionary interest.

Reasons for Our Decision

31. Group 5 schedule 8 of VATA 1994 zero rates the supply of construction services for a building intended for use solely for a relevant charitable purpose.
32. Note 6 to Group 5 defines use for a relevant charitable purpose as use by a charity in either or both ways namely:

(1) otherwise in the course or furtherance of a business;

(2) as a village hall or similarly in providing social or recreational facilities for a local community.

33. Note 12 to Group 5 provides so far as is relevant that

"Where all or part of a building is intended for use solely for a relevant charitable purpose –

a) a supply relating to a building (or any part of it) shall not be taken for relevant charitable (our italics) purposes as relating to a building intended for such use unless it is made to a person who intends to use the building (or part) for such a purpose.

34. The Appellant contended that the facts spoke for themselves. The construction services were supplied to the Appellant charity. The Leicester Diocesan Board of Education gave the Appellant the sales proceeds of lot 2 for the sole purpose of constructing a community hall for use by Langton residents. The planning consent for Lot 2 required the Appellant to build a community hall. The Appellant ensured that the hall was run by and for local residents as a village hall. At all times the Appellant's intended use for the building was as a village hall. Such use fell within the statutory definition of relevant charitable purpose. Thus the supply relating to the construction of the community hall was zero rated because it was made to the Appellant for a relevant charitable purpose, namely for use as a village hall.
35. The Respondents used a range of arguments based on the concept of use to undermine the Appellant's analysis. Their arguments focussed on the fact that the Appellant's charitable objects prevented it from using the community hall for a relevant charitable purpose.
36. Their first argument was that the functions of the community hall must be relevant to the purpose of the charity. Thus the facts that the community hall was actually used as a village hall and ran by an independent committee of local residents were immaterial. According to the Respondents, the actual use and organisation of the hall must be relevant to the purpose of the Appellant charity. Since the Appellant was an educational charity the actual uses of the community hall were irrelevant. Therefore, the Appellant was not using the community hall for a relevant charitable purpose. We consider the Respondents' argument flawed. In our view the Respondents were submitting in effect that relevant charitable purpose should be defined by the charitable objects of the Appellant rather than by note 6 to group 5 schedule 8 of VATA 1994.
37. Their second argument was that the relief under note 6(b), "village halls and similar buildings", was a specific relief for charitable bodies such as village hall communities, community associations and similar organisations. The Appellant was not a village hall charity, and, therefore, did not attract the relief. This argument was based on the Court of Appeal decision in Customs and Excise Commissioners v Jubilee Hall Recreation Centre Limited [1999] STC 381 where Lord Justice Bedlam expressed some sympathy with the formulation that a village hall was "something which was owned organised and administered by the community". Sir John Vinelott, however, in the same decision considered that the formulation "added a gloss to the words used which may be too restrictive".
38. The facts of Jubilee Hall concerned a charity that ran on a commercial basis a sports and fitness centre on the first floor of a listed building in Covent Garden, London. The charity sought to zero rate supplies of construction services for building an extension to the sports and fitness centre. The charity unsuccessfully argued before the Court of Appeal that the extension of the sports and fitness centre fell within the definition of "similarly as a village hall (our italics) in providing social or recreational facilities for a local community". In this Appeal we are not considering whether the "Langtons" community hall was similar to a village hall. On the facts found the predominant part of the "Langtons" community hall was a village hall. In Jubilee Hall Lord Justice Bedlam referred to the formulation of "owned organised and administered by the community" in the context of the essential characteristics of a village hall so as to give greater definition to the term "similarly". The Court of Appeal did not decide that the village hall relief under note 6(b) was restricted to small scale charitable bodies that owned and administered the hall. This was confirmed by Sir John Vinelott's comments about the restrictive nature of the owned organised and administered formulation. We find that the Respondents' submission about restricting the village hall relief to small scale charities which own organise and administer the hall is not a sustainable interpretation of the words used in group 5 schedule 8.
39. The third argument was a development of the reasoning in Jubilee Hall. The Respondents referred to the Court of Justice decision in Blasi v Finanzament Muchen I [1998] STC 336 for the well established principle that exemptions from VAT should be construed strictly. The history of the zero-rating provisions for relevant charitable purposes was set out in paragraph 10 of the High Court decision in Customs and Excise Commissioners v Yarburgh Children's Trust [2002] STC 207:

"The exclusion from the definition of 'relevant charitable purpose' in note (6) to Group 5 of any use of the building in the course or furtherance of a business was designed to ensure the compliance of the United Kingdom legislation on zero-rating with the requirement contained in art 17 of EC Council Directive 67/228 of 11 April 1967 on the harmonisation of legislation of member states concerning turnover taxes (and continued in force by art 28(2) of the Sixth Directive) that reduced rates of tax should only be maintained by member states for 'clearly defined social reasons and for the benefit of the final consumer'. The concept of the final consumer was held by the Court of Justice of the European Communities in EC Commission v United Kingdom (Case 416/85) [1988] STC 456, [1990] 2 QB 130 to be satisfied only where the supply is made to a person who does not use the exempted goods or services 'in the course of an economic activity'. These were infringement proceedings brought by the Commission against the United Kingdom and as a result of this decision the provisions of what is now Group 5 of Sch 8 to the 1994 Act were amended so as to introduce the qualification that building services supplied in relation to the construction of a building intended for use solely for a relevant charitable purpose should not be zero-rated if the premises were to be used by the charity in the course or furtherance of a business. Previously zero-rating had been available in respect of building services supplied in the course of constructing any building regardless of its intended use (see Group 8 of Sch 5 to the Value Added Tax Act 1983)".

40. Sir John Vinelott in Jubilee Hall construed the village hall relief in note 6(b) in accordance with the final consumer test as enunciated by the Court of Justice:

"The Court of Justice had in mind the case where the final consumer either benefits directly from the supply or where it can be said that the supply is sufficiently close to the consumer to be of advantage to him. In this context the plain purpose of village hall relief was in my judgment to extend the relief in sub paragraph (a) to the case where a local community is the final consumer in respect of the supply of services, including the reconstruction of a building in the sense that the local community is the user of the services (through a body of trustees or a management committee acting on its behalf) and in which the only economic activity is one in which they participate directly; the obvious examples are the bring and buy or jumble sale, the performance of local players and the like".

41. As stated in the Tribunal decision in The South Molton Swimming Pool Trustees (VAT and Tribunals decision no 16495) the construction of note6(b) is not whether to give it a wide or narrow construction:

"rather it is necessary to have in mind the purpose of the provision and the statement of the Court of Justice. In this appeal the supplies were made to the Trustees who were carrying on an economic activity, albeit non-profit making. Thus the Trustees do not come within the normal meaning of "the final consumer". Accordingly, it has to be considered whether the supplies to the Trustees were "nevertheless sufficiently close to the consumer to be of advantage to him".

42. Thus the issue in this Appeal was whether the supplies to the Appellant were nevertheless sufficiently close to the local community to be of benefit to it. The Appellant charity was an intrinsic part of the local community. The Appellant was committed by its agreement with the Leicester Diocesan Board of Education and the planning consent that the local community would be the sole and immediate beneficiary of the supplies of construction services to it. The Appellant ensured that the local residents ran the hall for the benefit of the "Langtons" community. We are satisfied on the above facts that the supplies of construction services to the Appellant were sufficiently close to the "Langtons" community to be of advantage to it.
43. The fourth argument related to the wording of note 12 to group 5, namely that relevant charitable purpose only applied if the Appellant intended to use the community hall as a village hall. The Respondents submitted that the wording of note 12 meant that the Appellant had to use the community hall itself in order to derive the benefit of zero-rating. As its charitable objects prevented the Appellant from running a village hall, the supplies of construction services to it were ineligible for zero-rating. We consider that the Respondents were importing the additional words "by the charity itself" to the wording of note 12 to support an unjustified construction of the statute.
44. The High Court in Yarburgh Children's Trust^[1] dealt with same submission:

For the commissioners Miss Whipple drew my attention to note (12) to Group 5 of Sch 8 which provides that:

'Where all or part of a building is intended for use solely for a relevant residential purpose or a relevant charitable purpose--(a) a supply relating to the building (or any part of it) shall not be taken for the purposes of items 2 and 4 as relating to a building intended for such use unless it is made to a person who intends to use the building (or part) for such a purpose ...'

On this basis she submitted in opening that the only use which is relevant for the purposes of note (6) is that by the trust to whom the building services were supplied. Use by the playgroup is not material to this issue. I accept that the question whether the supply was made in relation to a building intended for use solely for a relevant charitable purpose within the meaning of item 2 of Group 5 falls to be determined in the first instance by reference to the use of the building made by the trust. But if a determination of that issue involves a consideration of whether the playgroup itself carried on a business or merely conducted a non-business charitable activity then that issue has also to be determined as part of the consideration of the lease.

I think that Miss Whipple ultimately accepted that item 2 of Group 5 requires the court to look at all the uses made of the building and is satisfied only if all those uses amount to a use of the building for a relevant charitable purpose as defined".

45. We consider that Yarburgh Children's Trust is authority for the proposition that the construction of "use" in note 12 looks at all the uses made of the building. The term "use" is not restricted to actual use by the charity in receipt of the construction services. The Appellant was bound by its agreement with the Leicester Diocesan Board of Education and the planning consent to ensure that the predominant part of the building was used as a village hall by the local community. The Appellant facilitated the setting up of an independent committee comprised of local residents to run the hall as a village hall for the benefit of the local community. The hall was in fact being used as a village hall controlled by local residents. The Appellant intended to formalise those arrangements by creating a separate charity hall to which a lease of the hall would be granted at a peppercorn rent. We find on the above facts that the Appellant intended to use the community hall as a village hall.
46. Finally the Respondents suggested that as the Appellant retained ownership of the hall, it could terminate at any time the use of the hall by the local community. Further the Appellants' trustees were legally obliged to make decisions in accordance with its charitable objects which did not include the objectives of a village hall. We accept the Appellant's submission that they were not acting in contravention of its charitable scheme by using the sale proceeds from lot 2 for the construction of a village hall. The Appellant was bound by its agreement with the Leicester Diocesan Board of Education to use the sale proceeds for that sole purpose. Further the hypothetical possibility that the Appellant might renegade on its agreement with the Diocesan Board and also breach the conditions of the planning consent is not a ground for denying the relief of zero-rating under Group 5 schedule 8. The Respondents' remedy is to make a charge for VAT against the Appellant under paragraph 1 schedule 10 of the VATA 1994 where the hall ceases to be used for a relevant charitable purpose in the ten years following its construction.
47. We consider that the Respondents' central proposition that we should confine our enquiry to the charitable objects of the Appellant placed an interpretation on "the village hall relief" which was not in accord with the authorities. The decisions in Jubilee Hall and Yarburgh Children's Trust supported our interpretation that we should consider the totality of the arrangements, not just whether the Appellant itself was permitted to use the community hall as a village hall. Yarburgh Children's Trust involved use of the building by a separate charity from that to which the construction services were supplied. The High Court emphasised that all uses of the building should be considered when determining the issue of relevant charitable purpose. Sir John Vinelott in Jubilee Hall applied the test of the supply being sufficiently close to the consumer to be of advantage to him which in our view contemplated the possibility of intended use of the building by a body other than the charity in receipt of the construction supplies.
48. Our examination of the totality of the arrangements revealed that the Appellant was given a sum of money by the Leicester Diocesan Board of Education for the sole purpose of constructing a community hall on the charity's land for the benefit of the "Langtons" community. The Appellant charity was subject to a planning condition that the sale proceeds could only be used for a community hall. Although the Appellant was prohibited by its charitable objects from managing the community hall itself, it enabled the creation of a management committee consisting of local residents to run the hall for the benefit of the local community. The Appellant with the advice of the Charity Commissioners were in the process of strengthening the independence of the management committee by the creation of a separate charity. The Respondents were critical of the fluid nature of the Appellant's proposals, however, the facts demonstrate that from the inception of the project the intended use of the building by the Appellant was as a village hall run by and for the community, first by the parish council and then by an independent management committee.
49. We hold that:

(1) The supply of services for constructing the community hall was made to the Appellant, a registered charity.

(2) The Appellant was bound by its agreement with the Leicester Diocesan Board of Education and the planning consent to use the construction supplies solely for a village hall for the "Langtons" community.

(3) The Appellant set up a management committee of local residents to ensure that the hall was used as a village hall for the benefit of the local community.

(4) The supplies of construction services to the Appellant were sufficiently close to the local community of the "Langtons" to be of advantage to it.

(5) The Appellant intended to use solely the predominant part of the community hall as a village hill.

(6) The design, the intended and actual use of the hall fully met the essential characteristics of a village hall in respect of scale, activities and locality.

(7) The predominant part of the community hall was used solely for a relevant charitable purpose.

Decision

50. We are satisfied for the reasons given above that the supply to the Appellant in the course of construction of the "Langtons" community hall was intended for use solely for a relevant charitable purpose, namely a village hall, within the meaning of group 5 schedule 8 of VATA 1994.
51. We make no decision on the issues of the certificate (note 12(b) item 2 group 5 schedule 8) and apportionment (note 11). We give leave to the parties to bring these issues back before the Tribunal for determination if they cannot be resolved between them provided the disputed matters are within the jurisdiction of the Tribunal.
52. We, therefore, allow the Appeal about whether the supply was for a relevant charitable purpose. We order the Respondents to pay the reasonable costs of the Appellant in conducting the Appeal. If the question of costs cannot be resolved, either party may apply to the Tribunal for determination of the reasonable costs.

MICHAEL TILDESLEY OBE

CHAIRMAN

RELEASE DATE: 17 April 2007

MAN/06/0408

Note 1   Yarburgh Children’s Trust was not brought to our attention during the hearing.    [Back]