HMRC had claimed that Roselands Community Nursery and Playschool in Paignton and Hartley House Childcare Unit in Plymouth, Devon, were liable to pay VAT on the construction of their new premises.
But both believed they should be eligible for zero rating for VAT and enlisted the help of accountants Bishop Fleming.
Charities currently have zero rating on new building work. However, HMRC takes the view that most childcare settings are working as a business if they charge for looking after children and so VAT relief does not apply.
But in February the High Court ruled that St Paul's Community Development Trust, a childcare charity in Birmingham that has operated as a children's centre since March, should be exempt from VAT on its building work.
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