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Changes to the VAT exemption for sport-related services will be introduced from 1 September 2010. They will mainly affect affiliation fees charged by sports' governing bodies to member clubs; other sport-related supplies may also be affected.
In respect of such fees charged by sports-governing bodies to their member sports clubs, HMRC 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 – have been standard rated for VAT.
The European Court of Justice in Canterbury Hockey Club and Canterbury Ladies’ Hockey Club (C-253/07) found that the exemption applies more widely.
The court 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 essential to sport, that they are supplied by non-profit making organisations, and the true beneficiaries are those participating.
This means some supplies that were standard rated may now be exempt from VAT.
From September, 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.
See here for further details.
