How we saved Sibcas a £100,000 VAT bill and untold costs and complications on all future rentals
Sibcas Limited designs, manufacture and installs relocatable modular buildings for use in various locations including schools, offices, health centres, sports facilities and construction sites throughout the UK. With a turnover of approximately £23m, Sibcas is headquartered in Bathgate, with offices in Newcastle, Manchester and Birmingham.
What we did
French Duncan worked with Sibcas on a complex VAT challenge that arose from the rental of relocatable modular classroom accommodation to a Church of England school. As normal, the contract was agreed, and payment received, to include VAT at the standard rate. Sometime after the rental commenced, the customer contacted Sibcas querying the VAT liability, and requested it be treated, initially, as zero rated on the grounds that it was a Relevant Charitable Purpose building. This position was rebuffed by Sibcas, which resulted in a lengthy period of correspondence between Sibcas, their customer and HMRC.
Our specialist VAT team fully investigated the case and spent considerable time understanding Sibcas’ business and products, interrogating the reasons why this particular customer viewed the VAT liability differently. The customer’s position was that Sibcas was making a supply of immovable property, which should therefore be treated as exempt for VAT purposes. We disagreed with this view and were able to advise Sibcas that they had a strong technical case against the customer’s challenge of the VAT treatment applied and assisted Sibcas to take their case forward to the Tax Tribunals. We worked collaboratively throughout with other professionals, including helping Sibcas select a suitable QC to represent them in court.
Impact we had
By understanding both sides, and articulating clearly and simply the sometimes complex world of VAT legislation, the French Duncan team managed to defend Sibcas’ position and ultimately convince the 3 Tribunal judges that the original treatment of the supply by Sibcas was correct.
With French Duncan’s assistance, the case was finally settled in the Court of Session in late 2018, in favour of Sibcas. This saved the firm in the region of £100,000 in relation to this one transaction as well as untold costs and partial exemption complications with all future rentals.