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Zoo Tribunal highlights difficulties charities face over VAT relief claims

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Charities bear the burden of some of the most complex areas of VAT and, as the Charity Tax Group has recently published, a large VAT cost. One of the VAT reliefs that charities can benefit from is zero rating the construction of new builds. However, it can be difficult to meet the conditions, as highlighted in a recent charity tax case involving a zoo, the Paradise Wildlife Park.


Where a new build is designed to be used for “relevant charitable purpose” (RCP), its construction can be zero rated, removing 20% VAT from the cost to the charity.

In order to be classed as an RCP and get VAT relief, the charity needs to certify that it will use the new building for either:

  • Non-business purposes, or
  • As a village hall or providing social or recreational facilities for a local community.

Both conditions have been debated multiple times over the years, with what qualifies as “non-business” use being the issue of this recent decision in the First-Tier Tribunal.

Where no charge is made to anyone for using the building, this will normally be clearly a non-business activity. If a building is intended to be at least 95% used for such activities, RCP relief should apply.

On the contrary, where a charge is made, this will usually (but not always) be a business activity and preclude claiming RCP relief.

Paradise Wildlife Park

Paradise Wildlife Park (PWP) was engaged by a charity, Zoological Society of Hertfordshire, to construct a lion enclosure and outdoor exhibition at the zoo. The charity issued an RCP certificate to PWP confirming it could zero rate the construction costs for both builds.

Charges to be admitted to the zoo are made to visitors and this led HM Revenue & Customs (HMRC) to challenge whether there was a non-business use of these two structures.

As is common with zoos, the charity undertook educational activities, conservation projects, and various animal welfare and breeding programmes in accordance with its charitable objects. The funding to support these activities was largely generated from admissions to the zoological park.

The Tribunal found that the park represented a very significant part of the charity’s activities and that the admission charges relate to areas of the park that are “out of bounds” to visitors.

Although the new lion enclosure related to the charity’s conservation work, the fact that it incorporated an area for visitors to view the animals meant that it was accessed by visitors who had paid admission fees. Likewise, the dinosaur exhibit was accessed by paying visitors, even though they were required to stick to a designated path.

It was held that both new structures were there to make the zoo a more attractive place to visit and did not perform functions restricted only to the charity’s non-business activities. RCP relief was therefore denied. Presumably, had PWP constructed a conservation research building that was not open to the public, HMRC could have been more favourable to the non-business treatment and allowed RCP relief.

The Tribunal also considered whether an open-air structure lacking walls is a “building” for RCP purposes and found that it was not.

What this means going forward

The PWP case is one of the first where we have seen the application of HMRC’s Brief defining “business” issued following the leading Wakefield decision. This set out the two tests in determining whether an activity is a business:

  1. The activity results in a supply of goods or services for consideration, and
  2. The supply is made for the purpose of obtaining income (remuneration).

Although Wakefield was decided back in 2018, HMRC took until 2022 to issue its formal position, and there remains some uncertainty as to how HMRC will apply these tests going forward.  

This decision itself doesn’t break new ground in the area of RCP and what constitutes non-business but serves as a reminder of the difficulties that can exist in obtaining VAT relief on the cost of capital expenditure in charities. It also highlights the importance of getting advice before issuing an RCP certificate as penalties can be applied for incorrectly certifying a building.

Need help?

If you’d like to discuss this in more detail, please get in touch with your usual Larking Gowen contact. You can find contact details in the Our People section of our website. Alternatively, call 0330 024 0888 or email

Gillian McGill


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Larking Gowen


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