Readers’ forum: Golf entry fees

My client trades as a limited company and organises golf competitions for good quality players. For a typical tournament each player will pay an entry fee of £500 and this will be allocated as follows:

• £300 is allocated to a prize fund – two-thirds of the pool goes to the tournament winner and one-third to the runner up;
• £50 is paid to the caterer for a three-course meal after the tournament;
• £150 is retained by my client’s company as its profit and to cover other costs such as green fees to the club hosting the competition.

My understanding is that as far as the VAT registration threshold is concerned the relevant figure in the above example is £200 because the competition fund is outside the scope of VAT.

This seems logical but I do not want to find myself in a big VAT bunker...