Affiliation fees for sports clubs

Sports governing bodies and similar umbrella organisations often charge an affiliation fee to individual clubs who then charge this onto their members. Although the supply of this affiliation fee by non-profit making clubs to individual members is exempt from VAT, such supplies by profit-making commercial clubs are standard rated.

The existing concession provides a level playing field as it allows profit-making commercial sports clubs to treat re-charges of affiliation fees to their members as though they were disbursements, so they are not required to account for VAT on the fee charged. However, as re-charges of affiliation fees are not legally a disbursement, HMRC’s concession exceeds HMRC’s discretion, so will be withdrawn from 1 April 2018.

Thus, from 1 April 2018, the onward charge of affiliation fees by profit-making clubs will be subject to VAT, unless the conditions for treatment as a disbursement are met under the normal rules. Supplies of affiliation fees by non-profit making sports governing bodies, similar umbrella organisations, and by non-profit making sports clubs to their members will remain exempt under the law.

If you are affected by this, you will need to ensure that your VAT accounting reflects the correct position from 1 April 2018 onwards. HMRC have invited any comments on the potential impact of the withdrawal of the concession by 7 March 2017 to ensure they can be given sufficient consideration before publication of final information and impact notes.

If you would like to discuss any of the above further, please contact your usual Moore Stephens contact.

 

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