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HMRC internal manual

VAT Sport Manual

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HM Revenue & Customs
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Sport: Sports competitions

Basic position

The payment for the grant of a right to enter a competition is normally standard-rated. However, there is a specific exemption from VAT for the fee charged to enter a competition in sport or physical recreation, under items 1 and 2 of Group 10 of Schedule 9 to the VAT Act 1994.

Background

The payment of a fee which entitled the payer to no more than entry to a competition was initially outside the scope of VAT because the payment was not seen to be consideration for any supply by the competition organiser to the competitor. However, the position changed on 1 January 1981 following the VAT Tribunal decision in the appeal by Vernon Turner Indoor Bowling Club (LON/ 79/221). The Tribunal found that there was a supply and that payments were for the grant of a right to enter a competition for a consideration, and were thus standard-rated.

Vernon Turner appealed against the Department’s ruling that payments described as green fees were consideration for supplies of services within the scope of VAT and standard-rated. The appellant argued that payments were for entry to a competition, not for the right to use a green as that was given as part of the subscription, and so were outside the scope of VAT. However, in dismissing the appeal the Tribunal found that:

  • the fee paid for entering a competition was consideration for a facility provided by the club;
  • the grant of a right to enter a competition was the grant of a right for a consideration; and that
  • green fees were consideration for the right to use the indoor bowling rink.

The Vernon Turner decision was reinforced by the VAT Tribunal in the appeal by Belvedere and Calder Vale Sports Club (Man 79/129), concerning the VAT position of match fees. Belvedere and Calder Vale Sports Clubappealed against an assessment for VAT due on match fees for playing football, rugby and cricket. These fees were paid in addition to a subscription by members playing in particular games on particular days. The club claimed players were donating an amount to cover the cost of away matches, such as

  • the hire of local authority pitches,
  • referees’ expenses, and
  • fuel costs to reimburse members using their cars to transport players).

Any use of club facilities was paid for through subscriptions. However, in dismissing the appeal the Tribunal found that:

  • the subscriptions and match fees together constituted consideration for the provision by the club of facilities available to its members or, alternatively,
  • that the grant of the right to enter matches organised by the club was itself the grant of a right for a consideration, making the match fees taxable.

To lessen the effect of the Tribunal decisions on those activities that would be particularly penalised by standard- rating, a new Group 10 was introduced into Schedule 5 (Exemptions) to the Finance Act 1972 (now Schedule 9 of the VAT Act 1994) for the grant of a right to enter a competition in sport or physical recreation. This exemption, and the standard- rating to cover all other types of competition entry fee, both took effect on 1 January 1981.

The law

Item 1, Group 10 of Schedule 9 of the VAT Act 1994 exempts:

The grant of a right to enter a competition in sport or physical recreation where the consideration for the grant consists in money which is to be allocated wholly towards the provision of a prize or prizes awarded in that competition.

Item 2 of Group 10 exempts:

The grant, by a non-profit-making body established for purposes of sport or physical recreation, of a right to enter a competition in such an activity.

Scope of the exemption

Item 1 applies to the grant of a right to enter a competition in sport or physical recreation when all of the money paid in entry fees is returned to the competitors as a prize or prizes in that same competition.

Item 2 applies to the grant of a right to enter a competition in sport or physical recreation even when, unlike item 1, not all of the money paid in entry fees is returned to the competitors, provided the competition organiser is a non-profit-making body established for purposes of sport or physical recreation. The consideration for the exempt supply is the full amount of the entry fee which is required to be paid, without any deductions to take account of any prizes in cash or kind which may be awarded to winners.