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HMRC internal manual

VAT Input Tax

HM Revenue & Customs
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Specific issues: treatment of input tax on franchised catering in clubs

It is common for clubs to have their catering done for them by a franchised caterer. At many small clubs the franchisee is the club steward or their partner acting as a self employed person. They may or may not be VAT registered.

It can be hard to tell from some franchise agreements whether the club or the franchisee is supplying catering. If HMRC staff need more guidance on whether the club or the franchisee is making the supply they should contact Supply of Services Team.

If the club is supplying catering the VAT incurred by the club on the costs should be treated as the club’s input tax. This is because the catering is part of the facilities and advantages to subscribing members.

If the franchisee is supplying catering the precise extent to which the club may recover input tax has to be worked out. This will depend upon the nature of the supplies made by the club under the franchise agreement.

Sometimes the club will simply rent the kitchen premises to the caterer and make an exempt supply (unless, of course, the club has opted to tax the rents). If so, the normal partial exemption rules will apply.

In most cases the club does not rent any part of the premises to the caterer. Instead it enters into a franchise agreement setting out what is to be provided, when, and at what price.

These agreements also usually make the club responsible for providing heat, light, and kitchen equipment. This raises the question of how to treat the VAT incurred by the club on these costs.