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HMRC challenge to exempt catering for Students' Unions

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Answers to the top questions for Students' Unions who apply the catering concession

Fresh from their challenge to Students' Unions fundraising events, HMRC now appears to be targeting Unions by categorising catering outlets as 'bars'. 

Our recent webinar covered the arguments and how to try and defend your position. We received a significant number of individual queries, so have compiled responses to the most common questions below.

If you would like to discuss your individual circumstances further, please get in touch below or via your usual Crowe contact.

Is my Union potentially affected?

80% of Unions attending the live webinar thought that they may be, or know they are, affected by this issue. With over 70 attendees, this significant proportion indicates that your Union could be affected.

One Union has told us that, according to one of their visiting HMRC officers, the issue is whether the venue is defined as a 'bar' or not, rather than the level of alcohol sales made.

You may wish to review your position, and liaise with your advisers as necessary. Crowe can assist in this process if required.

What does HMRC consider to be a bar?

There is no set definition within HMRCs guidance on what constitutes a bar for the purposes of the catering concession. Based on information we have seen from HMRC, it appears that the branding of the venue is considered. However, the definition of a 'bar' may differ between HMRC officers and we expect that each venue will be considered on a case-by-case basis.

What are the next steps if HMRC is to be challenged on its approach?

NUS has asked us to advise that, as a first step for those challenged Unions, it is seeking a Counsel's Opinion via the law firm Bates Wells & Braithwaite.

This, we trust, will help to determine what can be challenged in respect of HMRCs position, what the arguments are, how to make a challenge, and the strength of that challenge. We expect it will also scope and quantify the likely considerable costs of a Judicial Review, which we understand is the only legal recourse currently available.

You may need to discuss with your auditors the potential for providing for this risk.

How far can HMRC go back for an assessment?

The statutory limit for HMRC assessment is four years from when the assessment is made. Any periods more than four years old cannot be assessed by HMRC unless they have already raised a 'protective assessment'.

HMRC can still make assessments even where the catering income stopped in the past, providing there was some catering income within the last four years. 

View our recent webinar on demand

Our webinar also covers Making Tax Digital for VAT, the impending deadlines and what you need to do in 2020. We have compiled answers to the most frequently asked questions that you may find useful.

Contact us

Robert Warne
Rob Warne
Partner, Head of VAT and Customs Duty services