Aberdeen Sports Village Limited found itself before the First-tier Tribunal over the VAT liability for the funding provided by its joint venture partners, Aberdeen University and Aberdeen City Council .
Aberdeen Sports Village provides sports facilities at its regional facility and received “Annual Grant Funding” from Aberdeen University and Aberdeen City Council. Aberdeen Sports Village considered that the funding was a donation and therefore was not subject to VAT. HMRC disagreed, and raised assessments totalling £352,472 to collect VAT on sums received from Aberdeen University and Aberdeen City Council, contending that these amounts were consideration for taxable supplies made.
The Tribunal agreed with HMRC and considered that Aberdeen University and Aberdeen City Council received a number of benefits from Aberdeen Sports Village and that the “Annual Grant Funding” was consideration for them. The appeal was dismissed.
This case highlights the need to consider funding arrangements carefully to determine whether taxable supplies are being made.