Loughborough Students’ Union is currently in a legal battle with HMRC appealing a court decision in 2013 over its claimant of VAT exception. LSU since 2009 has been benefiting from a concession that allows Charities, of which LSU is one, to make Fund Raising Events and some activities exempt from VAT. Up to 15 events of a certain type in a certain location can fall into this exemption of VAT. However, LSU was claiming on multiple different types of events, allowing VAT exemption to be claimed on nearly 40 events a year. Two years ago HMRC changed their position on whether Students’ Unions are eligible to benefit from this concession, ruling that they were not and also included a four-year retrospective effect.
As well as this, LSU has also been claiming concessions on VAT payments on 15 events a year as the union is a charity and is putting on cultural events. This meant that LSU didn’t have to pay VAT on services such as security, the cloakroom and bars. In 2013 the court ruled that LSU does not qualify for this exemption of VAT payment due to the fact that the exec members are paid employees of the union, particularly when staffing charity events, as opposed to being volunteers. The court however, did accept that the events were of a cultural nature due to the wide nature of the definition of a cultural event.
Loughborough Students’ Union appealed the decision made in 2013 and is now currently waiting the date of a Lower Tribunal court appearance. Label spoke to Andy Parsons, Union Director, and asked about what a potential loss would have and what provisions LSU had in place in case the union lost at the Lower Tribunal. A potential loss in court would mean that Loughborough Students’ Union could face a bill of ~£1.2 million. In order to reduce the impacts of potentially having to pay this bill, LSU is currently building up a reserve in order to pay the potential VAT bill. This reserve currently stands at ~£600,000 and is rising by around £150,000 a year. In the case of a loss in the Lower Tribunal, LSU would also appeal the decision meaning the case would go to the High Courts allowing more time for the reserve to be built up and provisions to be made to ensure that the student experience isn’t affected.
LSU has also taken on board the advise of their lawyers VAT-Angles LLP who represent LSU and four other unions who are party to this action. LSU now only claims VAT exemption on 15 events a year, down from the 40 a year in previous years. This reduction has led to the VAT exemption benefit dropping from £250,000 to £100,000 a year. It has also been made more obvious that some events held by LSU are in aid of charity, raising money for a range of different causes. On posters for FND a yellow box has appeared this year informing those who read it to what cause the charitable donations are going to.
Label asked why students had seemingly been kept in the dark. Andy Parsons said that the information on the situation was out in the public domain but that very few students would be truly interested in the topic. However, the situation has been going 2009 and since that point there has never been a statement from LSU, effectively keeping the students in the dark. There is information available about the situation, however, these are found in the Board of Trustees minutes and Exec Minutes and even these are sparse with information (and not always easy to find).
Label will endeavour to keep students up to date with the situation as much as possible. Hopefully information will be easier to access in the future for those of us who do wish to take an interest.
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