Revenue and Customs Brief 8 (2014): sports leagues
Published 17 February 2014
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Introduction
This brief announces a change in HM Revenue and Customs (HMRC) policy following the First Tier Tribunal (FTT) decision in the case of Goals Soccer Centres plc. This applies to all organisers of sports leagues and competitions in circumstances where pitches and league/competition management services are being supplied.
Who needs to read this?
Providers of pitches, both indoor and outdoor, used for league and cup competitions including traders who obtain pitches and associated facilities from third parties (such as local authorities, schools, sports clubs) and who administer/manage competitive sports leagues and competitions.
Background
Goals Soccer Centres plc owned a sports centre with a number of 5-a-side football pitches. It organised and administered competitive football leagues and competitions and charged the teams that participated. The business took the view that, for VAT purposes, this charge was for an exempt supply of land. HMRC disagreed and argued that the charge was for a taxable supply of the right to participate in an organised football league.
Decision of the FTT
The FTT found that there were 2 separate supplies being made:
- a supply of land (the pitches) which was exempt as the relevant conditions were met, and
- a supply of administration and management services which was standard rated
HMRC policy
HMRC accepts that the decision of the FTT is applicable to all traders who operate in circumstances akin to Goals Soccer Centres plc. This includes traders who hire the pitches from third parties such as local authorities, schools and clubs. However, exemption will only apply where there is a series of lets in accordance with the conditions set out in Note 16, Group 1, Schedule 9 of the VAT Act 1994. More details are provided in Chapter 5, VAT Notice 742 - Land and Property.
Accounting for VAT
Where a single price is charged to the customer, businesses will need to determine the value of the 2 different supplies to establish the correct amount of VAT due. Whatever method is adopted to do this, there must be sufficient documentary evidence kept to show how a business has arrived at a fair and reasonable apportionment. Paragraph 8.1 of the VAT Notice 700 - The VAT Guide gives more information. The business will also need to consider how much of the VAT it incurs is deductible, see Chapter 3, VAT Notice 706 - Partial Exemption.
What is being published?
Updated guidance on sports leagues to reflect HMRC change in policy, see VATLP19600. This Business Brief now cancels Business Brief 04/11.
Issued 17 February 2014