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HMRC internal manual

VAT Business/Non-Business Manual

Legal history: cases about club members’ facilities or advantages

Please note that the following material is not a full summary of the case - it merely highlights the principle referred to in the appropriate section of this manual.

British Field Sports Society 1998 STC 315

In this case campaigning in defence of members’ sporting activities was an advantage to them. This was so because the members were self-interested in wishing to be able to continue partaking in field sports.

HMRC does not consider campaigning carried on by other bodies for the general public good to be an advantage to individual members. It is therefore not a business activity.

British Railways Board (No. 2) 1977 STC 221

Payment for a student railcard was held to be payment for a supply of zero-rated transport. This was not because of what each party to the transaction thought was being supplied, but by examining the transaction to decide what had been supplied in substance.

Court Barton Property Plc VTD 1903

  • The tribunal had to determine the liability of a purchase of shares linked to the right to one week’s holiday a year in a holiday cottage for twenty-five years. The company claimed to be making only a supply of exempt shares. The tribunal held that two supplies existed. Although this case did not involve a membership body the decision can be applied whatever the nature of the trader issuing the shares.

    Dyrham Park Country Club Ltd VTD 700

    Members had to buy an unsecured, non-interest-bearing bond within 28 days of getting membership. The tribunal rejected the argument that the only supply was of an exempt security. It found that the purchaser’s payment required apportionment because it was consideration for both exempt and standard-rated supplies.

    Hurlingham Club 1976 STC 122

    An unincorporated members club owned land. This included tennis courts and croquet lawns. The club did not account for output tax on its subscriptions and was therefore assessed by HMRC.

    The Court held that the subscriptions gave members the right to enter the grounds rather than giving them a share in the beneficial ownership of club property. It could not be said that members had a licence to occupy any part of the club’s premises. A right over land must be interpreted as a legal or equitable interest. Output tax was therefore properly due on the subscription fees.

    Oldbus Ltd VTD 5119

  • A company that ran a flying club twice reorganised its share capital. In the first reorganisation it redeemed loan stock and replaced it, pound for pound, with ordinary shares. In the second reorganisation each existing shareholder was given the right to subscribe £1 for a further ordinary £1 share.
  • The tribunal found that share issues did not give rise to a VAT liability because no standard-rated benefits had been supplied in these transactions.

    Rothley Park Golf Club VTD 2074

    This case involved a scheme in which the members made loans to the club to finance property purchases. The member had to pay a subscription surcharge if a loan of less than a minimum amount was made. The club had accounted for VAT on the surcharges but not the loans.

    The tribunal highlighted the distinction between motive and consideration. It found that the important question was not the name by which the payment was described but whether any supply was made in return for it.

    Southchurch Workingmen’s Club & Institute Ltd VTD 613

    The club required members to hold a share as well as paying an annual subscription. It was ruled that this was effectively a two part tariff for the supply of membership facilities. Both the share and the subscription were taxable.

    Strange v Pettifor CT 300

    In a case at common law advantage was defined as the enjoyment of something which is denied to others.