Charities and Business Activities

In the case of The Institute for Orthodox Christian Studies vs HMRC, the Appellant appealed against an assessment raised in relation to output tax due on the sale of a property. The Institute for Orthodox Christian Studies is a registered charity whose aim was to provide theological education.


On purchase, the Appellant informed all appropriate parties intended use of the building was to be for a ’relevant residential purpose’ meaning that the sale was exempt from VAT and no output tax was to be accounted for.


HMRC claimed that approximately two thirds of the building was in fact being used for a business purpose, in the form of part of the property being rented out to business tenants for a consideration, and that VAT should therefore have been due on the sale. The fact that the business use in this case is exempt from VAT does not disqualify it from being a business activity for VAT purposes.


The final ruling stated that the rental of the rooms constituted a business activity and the assessment for the output tax due on the sale of the property was therefore valid.


If you are involved in a charity and require advice or assistance when it comes to VAT matters, contact one of our consultants via our helpline.

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