Pictured: Phil Luty

The First Tier Tax Tribunal has recently released its decision in favour of Three Counties Dog Rescue in the case concerning reclaiming £61,500 of VAT over a 4 year period in respect of veterinary fees and kennelling costs incurred by the charity. 

Representing the charity - Phil Luty, VAT Director at Midlands based Dains chartered accountants and business advisers, successfully argued  that the re-homing of animals for a specified 'donation' of a minimum sum constituted a supply for VAT purposes, such that the Three Counties Dog Rescue could register for VAT and recover VAT on its expenditure in relation to those supplies. 

The tribunal was told during the one-day hearing that the charity, which is based in Bourne, Lincolnshire, expected people who were re-homing a dog to pay £150, which Three Counties referred to as a "donation".

The charity accepts it should have been calling the £150 donation a charge and has since rephrased it as a "payment". 

But Three Counties argued that everyone who has re-homed a dog had paid the fee and received a dog in return. Several letters from satisfied people who had adopted dogs were shown to the tribunal panel.

HMRC argued that there was not a supply because the payment was called a 'donation'. The Judge, Lady Mitting, ruled in favour of the charity on all counts. 

Phil Luty comments: "I was happy Lady Mitting understood our arguments to the true substance of the transaction for VAT purposes. The centre costs more than £100,000 a year to run and relies heavily on fundraising so this ruling has secured much needed funds. The charity, which has rescued and re-homed more than 5,400 animals since it has been running, can now also enjoy the ongoing benefits of recovery of VAT on its future expenditure."

For more information on Dains, please visit their website here: www.dains.com