Commentary

BB/2B/05 VAT—supplies of nursery and crèche facilities by a charity

Part V16 Forms and other HMRC material

BB/2B/05 VAT—supplies of nursery and crèche facilities by a charity

BB/2B/05 VAT—supplies of nursery and crèche facilities by a charity

Business Brief, Issue 2. 10 February 2005

This Business Brief article is issued to clarify Customs' position on the business status of supplies of nursery and crèche facilities where those supplies are made by a charity.

This issue first arose as a result of the High Court case of Yarburgh Children's Trust (see Business Brief 4/03 (BB/4C/03, Division V16.3)) and has recently been tested again in the High Court case of St Paul's Community Project Ltd (Part V12).

In the earlier case of Yarburgh, the Court decided that the charity was not making supplies by way of business. Despite that decision, Customs' position remained that the provision of nursery and crèche facilities in such circumstances was a business activity for VAT purposes. However, in the more recent case of St Paul's, the Court's decision has again gone in favour of the charity. The Court found that the intrinsic nature of the enterprise was not the carrying on of a business, identifying the distinguishing features as the social concern for the welfare of disadvantaged children, lack of commerciality in setting fees and the overall intention simply to cover costs.

Customs do not agree that these features point to the activities being non-business because we consider that the charity is making supplies of services for consideration in much the same way as a commercial nursery. However, taking into account all the circumstances in this case, Customs have

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