Issue - meetings

(Report of the Director of Corporate Resources. To be introduced by the Cabinet Member for Finance and Carbon Reduction). The report set out the options with respect to opting to tax Alexandra Palace, which would require it to charge VAT on all future supplies and enable it to recover VAT paid out.

Cabinet considered a report, introduced by the Cabinet Member for Finance and Carbon Reduction, which sought approval to elect to opt to tax Alexandra Palace, which would require it to charge VAT on all future supplies and also enable it to receive VAT paid out.

RESOLVED:

That in respect of the proposed amendments to the VAT status of Alexandra Palace approval be given to either:

1)      Opt to tax the Palace only; or

2)   In the event that HMRC is unwilling to treat the Park and Palace separately for VAT purposes, to opt to tax both the Palace and Park (i.e. the whole legal entity).

       This is on the basis that without the action outlined in either 1) or 2) above, VAT incurred on the significant  capital expenditure in prospect for the regeneration of Alexandra Palace will not be recoverable, which would seriously compromise deliverability of the proposed regeneration.

That the Director of Corporate Resources be authorised to take any further action required by the Council in connection with the application to HMRC, preferably to opt to tax only the Palace but if necessary to opt to tax the whole legal entity.

Alternative Options Considered

Maintaining the existing VAT status was considered as this would enable the Palace and Park to continue to offer supplies exclusive of VAT; however, following detailed examination of the Council’s overall capital expenditure in relation to its partial exemption limit for VAT, it was clear that the proposed expenditure on the Heritage Lottery Funded (HLF) regeneration activity alone (without factoring in any other regeneration work streams) would risk the Council breaching its annual partial exemption limit leaving it facing a large unplanned VAT expenditure.

Reasons for Decision

In order to facilitate the regeneration activity at Alexandra Palace and Park it is proposed that a decision is taken to elect to opt to tax the Palace, which will require it to charge VAT on all future supplies and also enable it to recover VAT paid out.