A SPORTS club has won a nine-year ‘David and Goliath’ battle with the tax man that could have left it financially crippled and facing closure.

Westow Cricket Club makes just a few hundred pounds of profit each year from members’ subs and the sale of refreshments at matches, but was landed with a penalty of more than £20,000 for inadvertently issuing an incorrect VAT certificate, despite the fact that it had sought advice from Her Majesty’s Revenue and Customs (HMRC) before

doing so.

However, at a recent tribunal hearing, the case against the club was dropped, much to the relief of the volunteers who run it.

The case related to the development of the club’s new pavilion, which is also used for other community events.

When volunteers approached HMRC to ask if Westow Cricket Club’s status as a Community Amateur Sports Club (CASC) meant that it was able to issue a zero-rated VAT certificate to help it meet construction costs, HMRC responded by saying that the new pavilion appeared to qualify for zero rating.

Based on this advice, the club raised enough funding to cover the cost of the project by applying for grants and collecting donations, and construction work on the new pavilion began.

However, soon after HMRC opened an enquiry into the club and issued a penalty of £20,937, which was the amount of VAT that should have been charged.

At a First Tier Tribunal hearing, the club appealed against the penalty on the grounds that it had a ‘reasonable excuse’ because of the misleading advice it had been given. However, HMRC contested that a letter sent to the club was not ‘definitive’ and should not have been relied upon. Although the Tribunal criticised HMRC for its ‘unhelpful’ advice, the decision initially went against the club.

With the help of Michael Firth, Counsel of Gray’s Inn Tax Chambers, the club appealed against the decision at an Upper Tribunal hearing, again on the grounds that they had a ‘reasonable excuse’ but also on the grounds that the penalty ‘infringed on human rights for proportionality’. On this occasion, the club was successful in its appeal and the tribunal found that it had a reasonable excuse for incorrectly issuing the zero-rate VAT certificate.

Gary Brothers, managing partner of Independent Tax, which helped the club, said: “We’re delighted to have played our part in scoring a really fantastic result for this tiny village cricket club. The volunteers who run the club faced the wrath of HMRC’s investigative arm for issuing an incorrect VAT certificate, even though they had cleared it first by contacting a HMRC helpline for advice and being told it was OK to issue it. You really couldn’t make it up! Ultimately, we won the case after losing at the first stage of the appeal.”

Treasurer Robin Kellock, on behalf of Westow Cricket Club, said: “We are just glad it is all over after nearly nine years of having a potential penalty over us that would have caused a village cricket club, with one of the most thriving junior sections in the area, to probably fold.

“Myself and our secretary, Julie Price, had worked so hard to secure various grants and funding for the project and delivered the pavilion and it was very frustrating to have this legal battle hanging over us for so long.

“As a club we would like to thank Gary Brothers and Michael Firth.

“We can now move on, and are looking forward to a busy summer of cricket, and inviting Gary for a lemon drizzle cake, which was promised at the beginning of our journey, if we won.”