--- title: "Paradise Wildlife Park vs. HMRC: Charitable Tax Exemption" url: https://taxdisputes.co.uk/2023/03/paradise-wildlife-park-vs-hmrc-charitable-tax-exemption/ date: 2023-03-16 modified: 2026-06-02 author: "Tax Dispute Solicitors" description: "Paradise Wildlife Park Vs HMRC: Requirements for Tax Exemption" categories: - "First Tier Tax Tribunal" - "HMRC" - "Tax Evasion" - "Tax Investigation" - "Value Added Tax" - "VAT appeal" tags: - "First Tier Tax Tribunal" - "HMRC" - "HMRC Tax Assessment" - "HMRC Tax Disputes" - "Tax Evasion" - "tax exemption" - "Unpaid Tax" - "Value Added Tax" - "VAT" - "vat assessment" - "VAT dispute" image: https://taxdisputes.co.uk/wp-content/uploads/2023/03/paradise-wildlife-park-1024x605.jpg word_count: 1666 --- # Paradise Wildlife Park vs. HMRC: Charitable Tax Exemption *Paradise Wildlife Park Limited (“PWP”) has recently lost its appeal in the First Tier Tribunal (“FTT”) over whether the construction costs for its walk-through dinosaur exhibit and lion enclosure were eligible for VAT exemption. The FTT rejected PWP's claim that the costs incurred in the construction of these exhibits were eligible for zero-rated VAT, as they were not intended solely for use for a charitable purpose and did not qualify as buildings.* Our [tax litigation practice](https://lexlaw.co.uk/practice-areas/taxation-solicitors-london/) is the foundation of the firm. Have a conflict with [HMRC](https://www.gov.uk/government/organisations/hm-revenue-customs)? Our tax team is composed of knowledgeable tax lawyers who can help you handle your tax issues. For the best outcome, our ex-HMRC lawyers will [advise](https://taxdisputes.co.uk/expert-advice/) you on intricate tax laws. We have years of expertise in dealing with complex tax problems, including negotiating with HMRC and handling [tax appeals before Tax Tribunals](https://lexlaw.co.uk/first-tier-tax-tribunal-hmrc-representation-solicitor-london/) and in the High Court. ## History between PWP and HMRC The case stems from a 2017 project in which the Zoological Society of Hertfordshire (ZSH) hired PWP to build a lion enclosure, a shop, and an outdoor dinosaur exhibition at the Paradise Wildlife Park in Hertfordshire. PWP claimed that the construction services were eligible for VAT exemption as they were part of the construction of a building intended solely for a relevant charitable purpose. However, HMRC assessed the construction services as standard-rated, arguing that ZSH was carrying on a business that used the new constructions. PWP conceded that the shop construction should have been standard rated but appealed the assessment for the lion enclosure and dinosaur exhibit. The FTT examined the case law on business activity and the definition of a building, particularly Wakefield College v HMRC. The decision highlights the importance of understanding the rules for VAT exemption and when businesses should register for VAT. Starting a business can be a daunting process, and one of the first decisions that must be made is whether or not to register for VAT. This decision can have significant financial implications, as it affects the VAT that must be paid on goods and services. Land and property owners should also be aware of the VAT rules for relevant residential and charitable purposes. Understanding these rules can help businesses avoid claw back provisions and ensure compliance with VAT regulations. ## What did the Tax Tribunal Decide? The corporation argued that the arrangement was legitimate and that it was entitled to the tax benefits that it had claimed. However, the UK First-tier Tribunal (FTT) found in favor of the tax authorities. The FTT held that the arrangement was designed to exploit loopholes in the tax code, rather than to reflect the true economic realities of the company's operations. The FTT held that ZSH was carrying on a business, and that the lion enclosure and dinosaur exhibit were intended for use in the business at least in part. The FTT also ruled that the dinosaur exhibit was not a building, despite being a permanent structure. Therefore, the appeal was dismissed on the following grounds: - **Purpose of the building** The FTT while deciding the case held that in Order to qualify for zero-rating of construction services, the buildings must be intended exclusively for non-business purposes. However, the lions' den and the dinosaur exhibit, while serving conservation and educational purposes respectively, also contribute to the park's appeal and therefore have a business function. - **Was the outside exhibit a building?** Additionally, the FTT deliberated whether the dinosaur exhibit constituted a building, given that the term is not explicitly defined in statute. Despite being a permanent structure, the FTT ruled that the exhibit did not qualify as a building. - **Was ZSH carrying on a business?** According to the FTT's findings, ZSH was engaged in a business, and the enclosure and exhibit were intended to be used, at least in part, for business purposes. Consequently, the construction services supplied by ZSH were ineligible for zero-rating and were subject to VAT at the standard rate. ## Tax Exemptions Available for Buildings The main tax exemptions available for buildings built for charitable, educational or conservational purposes are: **Zero-rated VAT** When a building is constructed for a "relevant charitable purpose," it may be eligible for zero-rated VAT. This means that no VAT is charged on the construction costs, and the organization may be able to claim back VAT paid on certain expenses, such as equipment and supplies. To be eligible for zero-rated VAT, the building must be used for a purpose that is recognised as charitable by law. This includes, but is not limited to, the advancement of education, the relief of poverty, the advancement of religion, and the promotion of health. **Business rates relief** Charitable organizations may also be eligible for business rates relief on the buildings they occupy. Business rates are a tax on non-domestic properties, such as shops, offices, and warehouses. Charities may be entitled to a discount or exemption on their business rates, depending on the type of property and its use. **Gift Aid** Gift Aid is a tax relief that allows charities to claim back the basic rate of income tax on donations made by UK taxpayers. This can significantly increase the value of donations, as the charity can claim an extra 25p for every £1 donated. Gift Aid can be claimed on donations made for the general purposes of the charity, or for specific projects or campaigns. It is important for charities to keep accurate records of donations and to provide donors with a Gift Aid declaration form. **Capital gains tax relief** Charitable organizations may also be eligible for capital gains tax relief on the sale of buildings or land. This means that they do not have to pay capital gains tax on any profit made from the sale, as long as the proceeds are used for charitable purposes. ## What is the Eligibility Criteria for Tax Exemptions? To be eligible for tax exemptions, buildings built for charitable purposes must meet certain criteria. These criteria include: - The building must be used for a purpose that is recognised as charitable by law. This includes, but is not limited to, the advancement of education, the relief of poverty, the advancement of religion, and the promotion of health. - The building must be used solely for charitable purposes. This means that it cannot be used for commercial purposes or rented out for profit. - The organization must be a registered charity or a non-profit organization. This includes charities registered with the Charity Commission, community interest companies (CICs), and charitable incorporated organizations (CIOs). - In addition, to be eligible for zero-rated VAT, the building must meet certain criteria related to its design and construction. For example, it must be designed to meet the needs of the charitable purpose and must not be used for any other purpose. ## Requirements for a building built for charitable purposes in the UK **Registered charity status:** The organization must have registered charity status with the Charity Commission for England and Wales, the Charity Commission for Northern Ireland, or the Office of the Scottish Charity Regulator. **Public benefit:** The building must be used to provide public benefit in the UK, such as for religious worship, education, or the advancement of health or social welfare. **Solely for charitable purposes:** The building must be used solely for charitable purposes, which means that it cannot be used for any other purpose that is not related to the charitable aims of the organization. **No private benefit:** The building cannot be used to provide private benefit to any individual, such as providing accommodation for the trustees of the charity or their families. ## Tax Exemptions: What qualifies as a building? To qualify for tax exemptions, the facility must be a building and not a temporary structure or a piece of land. In general, a building is defined as a permanent structure that is attached to the ground, has a roof and walls, and provides shelter or accommodation for people or animals. Examples of buildings that may qualify for tax exemptions include: - **Community centres:** Buildings used for community activities such as meetings, classes, and events. - **Places of worship:** Buildings used for religious worship, such as churches, mosques, and synagogues. - **Residential homes:** Buildings used to provide accommodation and care for people who are elderly, disabled, or vulnerable. - **Educational facilities:** Buildings used for educational purposes, such as schools, colleges, and universities. - **Health facilities**: Buildings used for medical or health-related purposes, such as hospitals, clinics, and care homes. In contrast, temporary structures such as marquees or tents, and land without any permanent structures do not qualify for tax exemptions for buildings built for charitable purposes. ## Download the Tax Litigation Judgment Here [![](https://taxdisputes.co.uk/wp-content/uploads/2023/03/PWP-v-HMRC-724x1024.jpg)](https://taxdisputes.co.uk/wp-content/uploads/2023/03/TC08729.pdf) ## Tax Exemptions - Case Conclusion Tax exemptions in the UK can provide significant financial benefits to charities and non-profit organizations. By encouraging the construction and operation of facilities that benefit the public, these exemptions can help to improve the lives of people across the country. To be eligible for tax exemptions, organizations must meet certain eligibility criteria and follow certain procedures. By taking the time to understand these requirements and seeking professional advice when necessary, charities and non-profit organizations can maximise their tax savings and better serve their communities. ## Expert UK Tax Litigation Lawyers If you need[ HMRC advice](https://windinguppetitionsolicitors.co.uk/expert-advice/), we are available to aid you at every stage of the HMRC investigation or appeal process. Members of our legal team have first-hand experience and knowledge of the internal workings of HMRC. We can provide you with the very best representation in negotiations with HMRC and defending all forms of HMRC fraud, tax inquiry, tax fraud investigation, criminal tax evasion and HMRC enquiries, appeals and[ investigations](https://taxdisputes.co.uk/hmrc-tax-investigations-solicitors-london/). Our team specialises in successfully challenging HMRC decisions and will assist you in every aspect of the investigation. 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