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HMRC internal manual

VAT Supply and Consideration

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HM Revenue & Customs
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Consideration: Payments that are not Consideration: Grants: Wolverhampton Citizens’ Advice Bureau

In Wolverhampton Citizens’ Advice Bureau (MAN/96/1145) the trader provided facilities to give local citizens access to free legal and other advice. Wolverhampton Borough City Council agreed to provide funds through an annual payment and the project also received funds from other organisations such as the City Challenge Project. It accepted all but the Council’s payment were outside the scope of VAT since the Council required a written service agreement to be in place - therefore that particular payment was consideration for a taxable supply.

Customs and Excise accepted that the full-time solicitor making supplies funded by the Legal Aid Board was making a taxable supply, but viewed the funding payments as outside the scope of VAT. The reason for the appeal was a desire to increase the amount of taxable income in order to have a better recovery rate on the renovation of the premises.

The Tribunal considered the case to be indistinguishable from Hillingdon Legal Resource Centre (LON/90/12Y) (VATSC52000) since there was nothing in the service agreement to support the claim that a supply was being made. The trader also made an alternative argument that two supplies were being made - one to the council of the provision of the facilities and one of advice given to local citizens. This was based on the arguments in Redrow Group plc (1999 STC 161)(VATSC90400), but the Tribunal found that since no supplies had been made to the Council, there was no similarity between the cases.