United Kingdom VAT Tribunal Rejects Portsmouth Council’s DFG Admin Fee Appeal

• The First-tier Tribunal dismissed Portsmouth City Council’s VAT overpayment appeal over admin fees charged by its Home Improvement Agency for helping residents obtain Disabled Facilities Grants and manage adaptation works.
• The tribunal held the fees are standard-rated for VAT, despite accepting that the service is closely linked to welfare work and that VAT increases the cost of the welfare service.
• The Council won on the first issue: the HIA service was found closely linked to welfare activities. But it lost on the second issue because the tribunal said exemption only applies if the supported main supply is itself exempt.
• The tribunal treated the underlying building works as the main transaction, and since contractors supplying those works are not exempt public bodies or charities, the HIA’s admin fees were not exempt.
• The decision may be challenged on appeal, including arguments that the tribunal’s logic would overly restrict welfare exemptions and that the UK legislation does not contain the restriction relied on.

Source: pstax.co.uk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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