Further information on the scope of the exemption: Total amount of entry fees returned as prizes
Exemption under item 1 of Group 10, Schedule 9 of the Value Added Tax Act 1994 (VSPORT1030) applies to the grant of a right to enter a competition in sport or physical recreation, provided all of the money paid in entry fees is returned to the competitors as a prize or prizes in that same competition. This applies whatever the legal personality of the entity granting the right of entry to the competition: the entity can be, for example, an individual or a partnership. The wording of item 1 means that if all or any entry fees are carried forward as prizes or prize money in other competitions, the entry fee for the original competition will be outside the exemption and standard-rated. In such circumstances, any income from entry fees wholly or partly carried forward to later competitions becomes simply an amount contributed by the organiser. The introduction of other income to the entry fees of later competitions does not, in itself, prevent those later fees from being exempt.