HM Revenue and Customs Brief 1/18 - VAT - treatment of affiliation fees for sports clubs
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The purpose of this brief
The purpose of this brief is to remind taxpayers that the
concession enabling clubs to treat affiliation fees as exempt from VAT
will be withdrawn with effect from 1 April 2018.
2. Who should read this
This brief should be read by clubs who currently provide
standard rated sporting services.
A sportís governing body, or similar umbrella organisation,
often charges an affiliation fee to individual clubs who make an onward
charge to their members. Where the clubs are non-profit making, the
supply of this affiliation fee to their individual members is exempt
However, if the club is a profit-making commercial club, then
the supply to their individual member is standard rated.
The concession aimed to put profit-making commercial clubs in
a similar position to non-profit making clubs, so that they didnít need
to account for output tax on the fee charged. It achieved this by
allowing profit-making commercial clubs to treat these re-charges to
their members as though they were disbursements.
However, as such re-charges of affiliation fees arenít legally
disbursements, the concession goes beyond HMRCís
discretion and is being withdrawn with effect from 1 April 2018.
The concession is currently published in paragraph 3.6.2 of
VAT Notice 701/45.
consulted and called for evidence on the withdrawal of the concession
in January 2017.
Since no difficulties were raised, the government has decided
to announce withdrawal now so that clubs can make arrangements to
charge VAT on these charges with effect from 1 April 2018.
4. Other points
Withdrawal of the concession means that the onward charge of
the affiliation fee will be liable to VAT at the standard rate of 20%,
unless it meets the conditions of a disbursement. A full explanation of
those conditions can be found in paragraph 25.1.1 of Notice No 700.
The withdrawal of the concession has no impact on the VAT
treatment of affiliation fees by non-profit making sports governing
bodies, or similar umbrella organisations, and on non-profit making
sports clubs to their members.
In their case, the charge they make for affiliation fees will
continue to be exempt under the law. If they are partly exempt for the
purposes of calculating their recoverable input tax, such bodies should
ensure that they continue to include affiliation fees in their exempt
and total supplies in any appropriate partial exemption calculation.
Paragraphs 3.6.1 and 3.6.2 of Notice 701/45 are being amended
to reflect the changes as well as VAT manual VSPORT2020 Ė Affiliation
5. Get more information
Contact the VAT Helpdesk to get more information.
About the Author
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for educational / informational purposes only. Article reproduced by
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