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HMRC internal manual

VAT Government and Public Bodies

HM Revenue & Customs
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Other local authority activities: sport and leisure: leisure service schemes

Many local authorities offer leisure schemes which allow free or discounted use of the authority’s leisure facilities in return for periodic payments. These payments, which may be monthly or annually for example, are for the right to use all the facilities in a leisure centre or similar establishment. This is a single supply for VAT purposes and so apportionment is unlikely to be possible.

In the case of a DSO (see VATGPB8420) the supply of the right to use the facilities is likely to be standard rated because they are predominantly of a type which would be taxed at the standard rate. However, in the case of a NPDO the right to use the facilities could be exempt from VAT because they are predominantly of a type which are exempt from VAT as a service closely linked with, and essential to, sport. Further information about the exemption for sport can be found inNotice 701/45‘Sport’ (external users can find the notice at…). It is important to remember that each case is likely to turn on its own facts. A tax point arises on receipt of each payment.

If the total amount paid by instalments is greater than would be due if the user opted instead to pay a one-off fee, then the additional amount is for an exempt supply of finance. For further information see Notice 701/5 ’Clubs and Associations’ (external users can find the notice at…