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HMRC internal manual

VAT Sport Manual

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HM Revenue & Customs
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Sport: Eligible body status

The main change that the Value Added Tax (Sport, Sports Competitions and Physical Education) Order 1999 (SI 1999/1994) (the ‘Sports Order’) made to the existing law was the introduction of a new eligible body status, which put additional requirements on sports clubs to qualify for exemption beyond mere formal observance to being a non-profit-making body through its constitution. Aclub will now only qualify for exemption if it fulfils all the following criteria:

  • it is non-profit-making;
  • its constitution does not allow it to distribute any profits or surpluses it makes, other than to another non-profit- making club, or to its members on its winding up or dissolution;
  • it uses all profits or surpluses from its playing activities to maintain or improve the related facilities or for the purposes of a non-profit- making body; and
  • it is not subject to commercial influence.

The meaning of the term commercial influence is defined in section 5 of Notice 701/45 Sport. For the purposes of evaluating the effectiveness of the Sports Order, it should be remembered that the term is limited to specific definitions under the law, principally that within the last three years:

  • no salary has been paid calculated by reference to profits or gross income to an officer, shadow officer or anyone associated with such an officer; or that
  • certain goods or services (relevant supplies) were bought from anyone associated with the club.

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