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HM Revenue and Customs Brief 1/18 - VAT - treatment of affiliation fees for sports clubs


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Published 17 January 2018

1. 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brief is to remind taxpayers that the concession enabling clubs to treat affiliation fees as exempt from VAT will be withdrawn with effect from 1 April 2018.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 brief

This brief should be read by clubs who currently provide standard rated sporting services.

3. Background

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 from VAT.

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re-charges of affiliation fees arenít legally disbursements, the concession goes beyond HMRCís discretion and is being withdrawn with effect from 1 April 2018.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.

HMRC 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 Fees.

5. Get more information

Contact the VAT Helpdesk to get more information.

About the Author

© Crown Copyright 2018.

A licence is needed to reproduce this article and has been republished for educational / informational purposes only. Article reproduced by permission of HM Revenue & Customs.

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Article Published/Sorted/Amended on Scopulus 2018-01-18 00:00:00 in Tax Articles

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