MID Ulster District Council has won a VAT case that could see local authorities in the North of Ireland receive rebates of more than £50 million.
The case centred on whether VAT should be levied on the charges paid by members of the public for using council sport and leisure facilities.
A tax tribunal ruled that VAT should not have been applied on those charges since 2006.
The relevant VAT will now have to be repaid to all Derry and Strabane council an the ten other councils in the North.
Councillor Cathal Mallaghan, chair of Mid Ulster, called the ruling a “mammoth victory”.
“Given the significant financial pressures which we all face as a result of the pandemic, the timing could not be any better,” he added.
The tribunal agreed with the council that supplies of leisure and recreational services to members of the public were provided by the council in its role as a public authority acting under a special legal regime, within the meaning of the EU Principal VAT Directive.
The council was then able to demonstrate there was no significant distortion with the private sector, as they could not provide the same level and scope of services without financial viability being primary.
That meant no VAT should ever have been charged on the services.
Mr Mallaghan praised the council’s finance director, JJ Tohill, for his “expertise, hard work and dogged determination” in pursuing the case.
The council first began to challenge the VAT payments in 2009.
It is understood the rebate for Mid Ulster alone could be about £3m.
An HMRC spokesperson said it was “considering the judgement carefully”.
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