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HMRC internal manual

VAT Business/Non-Business Manual

Legal history: cases about apportionment and valuation of membership supplies

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.

Automobile Association 1974 STC 192

HMRC argued that members’ subscriptions should be wholly standard-rated. This was because they were consideration for a single supply, which was the grant of membership.

The Court held that the subscriptions were payment for supplies of the individual benefits and advantages. As a result the subscriptions had to be apportioned according to the relevant individual liabilities.

Friends of the Ironbridge Gorge Museum VTD 5639

The object of the Friends was to raise money to support the Ironbridge Gorge Trust Limited. The Trust maintained and ran the Ironbridge Gorge historical site and museum. The Museum offered token benefits, such as reduced entrance fees to the site, to members of the Friends. People applying to join the Friends were told that half of their subscriptions were to be donated to the Museum.

The tribunal held that the Friends’ Organisation was not brought within the scope of section 94(2)(a) of the VAT Act 1994. This is because anything that the members of the Friends received was supplied by the Museum.

Swindon Masonic Association Ltd VTD 682

The association owned the freehold of a building designed for use by the freemasons of Swindon. Three sources of income were identified. These were donations from lodges, expenses reclaimed from lodges and association receipts.

The tribunal found the donations from lodges and association receipts to be outside the scope of VAT. This was because no supply was made in return for the payments. The expenses reclaimed from the lodges were found to be consideration for supplies of services, but exempt as a right over land under Group 1 of 5 to the Finance Act 1972 (now Group 1 of Schedule 9 to the VAT Act 1994).