VAT exemption for supplies by non-profit making sports clubs

HM Treasury has announced that the Value Added Tax (Sport) Order 2014 (SI 2014/3185) will come into force from 1 January 2015. It will amend the VAT Act to reflect HMRC’s change of policy following the judgment of the Court of Justice of the European Union (CJEU) in Bridport & West Dorset Golf Club (Case C-495/12) (Bridport). This follows Revenue & Customs' Brief 25/14, which explained the implications of the CJEU’s judgment in the Bridport case, and confirming that UK legislation would be amended.

This was required because, under European Law, supplies by non-profit making bodies of services closely linked and essential to sport to persons taking part in sport, must be exempt from VAT. However, the UK applied a further test to limit exemption, where the body supplying sporting services operated a membership scheme, only to supplies made to its members. The CJEU held that, in applying this exemption, it was immaterial whether the supply was provided to a member of the body or a visitor, and a member state was not permitted to exclude certain groups of recipients from the benefit of the exemption provided that the specified conditions were satisfied.

The order now widens the scope of the VAT exemption for supplies of sporting services by non-profit making bodies. In particular, Group 10 of Schedule 9 to the Value Added Tax Act 1994 (exemptions: sport, sports competitions and physical education) is amended to remove the requirement for the individual receiving the supply to be a member where the body making the qualifying supply operates a membership scheme.

It means that supplies of sporting services made to both members and non-members of non-profit making sports clubs will, from 1 January 2015, be able to qualify for VAT exemption.

The change will benefit non-profit-making sports clubs, whose supplies of sporting services to non-members that were previously treated as standard rated taxable supplies will now be VAT exempt. Similar supplies made by profit-making sports clubs will all continue to be taxable at the standard rate of VAT, as supported by the Principal EU VAT Directive.

Further information is expected to be published by HMRC shortly, and the HMRC Notice 701/15 Sport will also be updated to reflect the change in policy in due course.



Nick Warner

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