Buildings and construction ― definition of a relevant charitable purpose (RCP)
This guidance note looks at the meaning of the term ‘relevant charitable purpose’.
Detailed discussion of the legislation and case law on an RCP is found in De Voil Indirect Tax Service V4.232BC.
When is a building used for an RCP?
Use for an RCP means use by a charity either (or both):
for non-business purposes
as a village hall or similarly in providing social or recreational facilities for a local community
VATA 1994, Sch 8, Group 5, Note 6
When is a building used by a charity?
The meaning of ‘charity’ in a VAT context is described in the Charities ― overview guidance note.
When is a building used for non-business purposes?
There is a long history of case law on whether activities are ‘business’ activities for VAT purposes. It is worth highlighting that just because activities do not make a profit they are not necessarily ‘non-business activities’. Therefore, charities can (and frequently do) have many business activities. Business and non-business for charities is explored in the Charities ― overview guidance note.
For example, in one influential case, the Court of Appeal decided that a charity which provided water-based and outdoor activities at a price that was flexed to customers’ means was acting ‘in the course or furtherance of business’. This meant that a new centre it was building was not being used for an RCP and zero-rating was not available for the