HMRC policy change regarding the VAT treatment of the provision of sports pitches together with administration/management services for organised sports leagues and competitions.
Revenue & Customs Brief 8/2014 announces HMRC’s change in policy following the First Tier Tribunal (FTT) decision in the case of Goals Soccer Centres Plc  UKFTT 576 (TC). Updated guidance on sports leagues is also being published in order to reflect HMRC’s change in policy. HMRC’s former policy set out in Revenue & Customs Brief 4/2011 no longer applies.
HMRC now accepts that where businesses provide sports pitches together with administration/management services for organised sports leagues and competitions in circumstances similar to Goals Soccer Centres Plc, this may involve separate exempt supplies of land and standard-rated supplies of administration services. Previously, HMRC took the view that supplies made by commercial sports league providers were standard rated.
Goals Soccer Centres Plc owned a sports centre with various five-a-side football pitches. It organised and administered competitive football leagues and competitions and made associated charges to the participating teams. Although Goals Soccer Centres plc viewed these charges to be in respect of a VAT exempt supply of land (pitch hire), HMRC considered that the charges instead related to an overarching taxable supply of the right to participate in an organised football league, and not one of land.
The FTT decided that, based on the particular circumstances involved, there were two contracts and two distinct services being supplied, and the pricing structure did not lend support for HMRC’s view that there was a single composite supply. For VAT purposes, the supplies included a discrete supply of the use of a pitch (which was VAT exempt provided the statutory criteria were met), and the supply of standard rated league management services.HMRC accepts that the decision of the FTT will apply to all businesses who operate in circumstances similar to Goals Soccer Centres Plc. However, it is important to note that exemption will only apply where there is a series of lets and the relevant conditions (set out in Note 16, Group 1, Schedule 9 of the VAT Act 1994) are met.
Where businesses charge a single price to the customer, they will need to determine the value of the two different supplies to calculate the correct amount of VAT due, and will need to keep sufficient documentary evidence to support a fair and reasonable apportionment. Businesses will also need to consider how much VAT they will be able to recover on costs.
HMRC’s change in policy will be relevant to all organisers of sports leagues and competitions in circumstances where pitches and league/ competition management services are being supplied. Providers of indoor and outdoor pitches used for league and cup competitions as well as businesses who obtain pitches and associated facilities from third parties (such as local authorities, schools, sports clubs) and who administer/ manage competitive sports leagues and competitions should also consider how this policy change will impact their VAT positions.
If you require any additional information or if you would like to discuss further, please contact our VAT team.
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