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HM Revenue and Customs Brief 15/10


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Issued 29 March 2010

VAT – Changes to the treatment of certain sports related services following the ECJ judgment in Canterbury Hockey Club (C-253/07)

The issue

Changes to the VAT exemption for sports related services are being introduced from 1 September 2010. This will primarily affect affiliation fees charged by sports governing bodies to member clubs but the VAT treatment of other sports-related supplies may also be affected.


Certain services closely linked with and essential to sport or physical education are VAT exempt when supplied by an eligible body (that is, essentially non-profit making bodies not subject to commercial influence) to an individual taking part in sport.

In respect of affiliation fees charged by sports governing bodies to their member sports clubs, we have previously restricted the exemption to fees calculated on a per person basis (provided the services were closely linked to sport). Affiliation fees calculated by other methods, for example, on the basis of the club size or the number of teams fielded, were standard rated for VAT.

However, the ECJ in the case of Canterbury Hockey Club and Canterbury Ladies’ Hockey Club found that the exemption applies more widely. It has ruled that in the context of persons taking part in sport, the exemption includes services supplied to corporate persons and to unincorporated associations, provided that the supplies are closely linked and essential to sport, that they are supplied by non-profit making organisations and the true beneficiaries are individuals taking part in sport.


The ECJ ruling means that some supplies which were standard rated, for example because they were supplied to a corporate body or unincorporated association, may now be exempt from VAT if the services are closely linked and essential to sport and the true beneficiaries are individuals taking part in sport.

From 1 September 2010, eligible bodies meeting the conditions for exemption outlined in VAT Notice 701/45 Sport must exempt supplies where the true beneficiaries are persons taking part in sport, even if the supply is not made direct to an individual and irrespective of how the fee is calculated. Supplies made to commercial profit-making organisations do not meet the true beneficiary test and will not fall within the exemption for supplies of services closely linked and essential to sport.

Where the affiliation fee confers a number of benefits, which individually would be liable to different VAT treatment, the advice in section 4 of Notice 701/5 March 2002 will help determine whether there is a single or multiple supply. Where the conditions of Extra Statutory Concession 3.35 (apportionment of membership subscriptions to certain non-profit making bodies) are met governing bodies may continue to take advantage of the option to apportion their affiliation fees between the rates of VAT applicable to the individual elements. The ECJ gave some examples of services that do not fall within the exemption, including advice about marketing and the obtaining of sponsors. These will be liable to the standard rate of VAT when ESC 3.35 is applied unless relief is available under another part of the VAT Act.

This policy change may also affect some other supplies closely linked and essential to sport by eligible bodies to corporate persons and unincorporated associations where the true beneficiary is a person taking part in sport. An example could be the letting of sports facilities to a club for the direct use of its members. In these circumstances, the supply is exempt if the club is non-profit making. Otherwise it will be taxable.

Making claims or adjustments

The changes described above must be implemented from 1 September 2010 and there is no requirement to make adjustments in respect of supplies made prior to this date. However, any organisations wishing to implement the judgment before 1 September 2010 (and start exempting affected fees from an earlier date) are entitled to do so.

Where a business wishes to make a claim to us (under section 80 of the VAT Act 1994) for repayment of VAT incorrectly accounted for on sports related services, they may do so, subject to the conditions set out in Notice 700/45 How to correct VAT errors and make adjustments or claims.

All claims will be subject to the four-year time limit in section 80(4) of the VAT Act 1994 and to the set-off provisions in section 81 of the VAT Act and section 130 of the Finance Act 2008.

There may be direct tax implications where amounts of over-declared output tax are repaid to businesses and your attention is drawn to Revenue & Customs Brief 14/10.

We may reject all or part of a claim if repayment would unjustly enrich the claimant.

More details on making claims and ‘unjust enrichment’ can be found in VAT Notice 700/45 How to correct VAT errors and make adjustments or claims.

Further information

For further information and advice, please contact our Helpline on 0845 010 9000.

About the Author

© Crown Copyright 2010.

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 under the terms of a Click-Use Licence. Tax briefs are updated regularly and may be out of date at time of reading.

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Article Published/Sorted/Amended on Scopulus 2010-06-14 12:01:34 in Tax Articles

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