VSPORT2020 - Affiliation fees

Sports Governing Bodies -VAT treatment of affiliation fees

The Canterbury hockey clubs case (C-253/07) concerned members-only sports clubs to which, members paid an annual subscription for their membership rights. The hockey clubs were unincorporated associations without legal personality. These clubs were members of England Hockey, a non-profit- making organisation which existed for the encouragement and development of playing hockey. England Hockey charged affiliation fees in consideration for the service it provided to the hockey clubs.

The Court of Justice decided that supplies were exempt where:

  • the services were closely linked and essential to sport;
  • the true beneficiaries of the service were individuals taking part in sport; and
  • the supply was made by a non-profit-making body.

With effect from 1 September 2010, HMRC changed its treatment of such affiliation fees to exempt them, irrespective of how the fee was calculated by the governing body.

Supplies made to commercial profit-making organisations (for example professional football clubs) will not normally be exempt because the true beneficiary is predominantly the organisation and not the individuals taking part in sport.

Sports clubs: VAT Treatment of affiliation fees

The individual clubs often make an onward recharge to their members in respect of the affiliation fees. Where the clubs are non-profit making, the supply of this affiliation fee to their individual members is exempt from VAT.

However, if the club is a profit-making commercial club, then the supply to their individual members is standard rated.

Until 31 March 2018, there is an extra-statutory concession enabling profit-making commercial clubs to treat the recharges of affiliation fees to their individual members as disbursements and therefore outside the scope of VAT. In order to qualify as a disbursement, the conditions set out in paragraph 25.1.1 of Notice No 700 must be strictly fulfilled.

From 1 April 2018, this concession is withdrawn and the recharge of affiliation fees by profit-making commercial clubs is treated as part of the charge for the facilities to play golf and is therefore standard-rated.