The University of Exeter’s student union has contested a bill of more than £280,00 for unpaid VAT on food sold in its bar.
Following a review by HMRC, the student union was told it owed £269,000 of unpaid taxes and an additional £14,000 in interest, BBC News reports.
The dispute has centred on the letter sent by HMRC in September 2003 which the guild believed allowed food sold in their student bar, called The Ram, to be exempt from VAT.
The guild has challenged the assessment and said the letter suggested the food was exempt from VAT.
According to the guild, HMRC argued the letter “can be interpreted differently”.
The case will be heard by a tribunal following a hardship request made by the guild.
HMRC said it did not comment on individual cases or ongoing investigations.
Richard Wild, of the Chartered Institute of Taxation, said HMRC would “typically request” that a taxpayer adopted the correct VAT payments from a current or future date.
He said: “Any retrospective action by HMRC should be exceptional, and restricted to cases where the terms of its policy are not met.”
An annual report showed a 10 per cent decrease in guild sales last year, falling to about £2.5m.
In its 2017-18 report, the guild said: “Trading has been particularly challenging in our licensed venues as both our bar and nightclub have seen significantly reduced numbers of attendees throughout the year.”
The student union said it expected to see an improvement in the figures from the 2018-19 academic year.