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HMRC has published guidance to clarify the VAT treatment of school holiday clubs, depending on whether childcare is the predominant element of the services supplied.
In RSR Sports Ltd (TC7453) the First-tier Tribunal found that the predominant element of the holiday camps was childcare rather than the activities, so the supplies fell within the welfare exemption.
As a result of that decision, HMRC will in future distinguish between activity-based clubs and those which exhibit the following key features:
- the members of staff are supervising activities and do not hold any coaching or teaching qualifications;
- there is no external standard to which the services are being provided; and
- the activities are an adjunct to the essential service which is childcare.
The brief invites businesses that believe they have received an incorrect ruling before the RSR decision to seek a correction and a refund of any tax overpaid.
