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HMRC internal manual

VAT Business/Non-Business Manual

HM Revenue & Customs
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Clubs and associations: formula for valuing discounted admissions

Many charitable bodies provide free or discounted admission for members to their reserves and sites. This is often the only or main benefit to members. It has to be valued to work out the size of the remaining donational element.

The method that HMRC has adopted for valuing this benefit is based upon the number of visits made by members over a period divided by the total membership to give an average admission cost attributable to each member. A period is normally a year but an alternative length of time may be agreed.

The method can only be used if the body maintains a record of the visits made to its sites by members. The calculation is:

  1. Record the number of visits to sites made by members in the period. If this formula is being introduced for the first time, the period should be a quarter. The total can then be grossed-up to give a projected figure for the coming year. If the formula has been in operation for some time, the period will normally be a year.
  2. Divide the total number of visits made by members in the period by the total number of members. This will give the average number of visits per member for the period.
  3. Multiply the figure at b. by the discount a member receives for each visit. If the body has several sites for which different rates of discount are applied, steps a. to c. will have to be performed for each site and the whole totalled. This will give the total value of admission discounts per member for the period.
  4. The value arrived at in c. will be the extent to which the subscription can be attributed to the standard-rated admissions benefit. Deducting d. from the subscription will leave a balance. This balance is outside the scope of VAT as a donation if no other benefits are supplied, but may require further apportionment if there are other benefits. Such further apportionment may result in a residual donational element if the remaining benefits do not comprise the whole of the value remaining.
  5. The figures obtained over the year can be used as the basis for valuing the admissions benefit in the subsequent year’s subscriptions. However, at each year end, an accounting adjustment for the past year should be made because the actual uptake has by then become known. No donational element can be accepted if the value of admissions taken up exceeds the subscription charge to the member.