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HMRC internal manual

VAT Trade Unions and Professional Bodies

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HM Revenue & Customs
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Trade unions and professional bodies: Criteria that all the bodies must fulfil: "Available without payment other than a membership subscription"

Exemption does not cover any supplies that are not automatically supplied in return for the subscription and for which there is an additional charge. It is therefore vital to identify what benefits are supplied for the subscription.

It is possible to have supplies made by different organisations which, although they appear to be similar, will have different liabilities, because of the consideration position in each individual case.

The most likely variations are caused by events for which an additional charge is made to members for admission.

  • If the event is intended to be self-financing and not subsidised by subscription income, then no element of the subscription can be for the right of admission. In this case, an element of the subscription may either be

    • for the right to attend (if the event is members only), or
    • for the right to a discount (if members pay less than non-members).

The right to attend such an event is available without payment other than the membership subscription, and so qualifies for exemption, as long as all the other criteria are met.

  • Where, however, the event is subsidised by subscriptions, there is an element of the subscription that can be linked to the right of admission. The admission is not gained, though, without further payment, and fails to qualify for the exemption. This condition is expanded upon by “Note (1)” to “Item 1” which excludes from exemption supplies of admission when non-members are also admitted to the premises, event or performance for a consideration. For clarification, examples of possible situations are given below. For the purpose of these examples, the trader is a trade union which has satisfied all the other criteria for exemption under “Group 9”.
## Example ## Analysis
   
### Christmas meal and dance  
* Admission confined to members who pay no charge to attend. Part of the subscription represents consideration for the right of admission to the event. This supply is not “referable” to the trade union’s aims. An appropriate element of the subscription should be standard-rated.
     
  * Admission confined to members, who may each bring a guest. Neither the members nor their guests pay any charges to attend. Again, part of the subscription represents consideration for the right of admission to the event. There is the additional accompanying entitlement to bring a guest. The supply is not “referable” to the trade union’s aims. The presence of guests does not prevent this being a supply to the members because the members have specifically been given the right to bring these people along, the event was not open to all and sundry. An appropriate element of the subscription should be standard-rated.
     
  * Admission is available to members and non-members. Non-members pay for admission, members do not. The free admission for members is a benefit supplied in return for their subscription but is excluded from exemption by “Note 1”. Also it is not a benefit which is “referable” to the trade union’s aims, but it is one for which the only payment is an appropriate part of the subscription. An appropriate element of the subscription should be standard-rated. Non-member admission payments are also to be taxed at the standard rate.
  * Admission is available to members and non-members. Members are admitted for half the charge to non-members. If the event is intended to be self-financing without any subsidy from members’ subscriptions, the benefit the members receive for their subscription is the right to a discount. However if the subscriptions do go towards the cost of the event an element is for part payment of admission.
In either case the benefit is not “referable” to the trade union’s aims, and so an appropriate element of the subscription should be standard-rated. The additional admission payments received from members and non-members are to be taxed at the standard rate.    
  * Members and non-members pay the same charge for admission. Here there is no benefit to the members; therefore this admission aspect can be ignored when any apportionment of the subscription is made. Admission payments received from the members and non-members are taxable at the standard rate.
  ### Annual conference  
  * Admission is confined to members, who pay no charge to attend Part of the subscription represents the consideration for the supply of admission. It is “referable” to the aims of the union and there is no charge above the relevant subscription element. An appropriate element of the subscription can be treated as exempt.
  * Admission is confined to members, who may bring a guest, and selected honorary invitees. In practice, members seldom bring guests. No admission charge is made to members, guests or honoraries The presence of a few selected non-members does not prevent this being a supply to the members. The supply is “referable” to the aims of the union, there is no charge other than the subscription and there is no admission payment from non-members. An appropriate element of the subscription can be treated as exempt.
  * Admission is confined to members but they have to pay a separate charge to attend Members receive a benefit in return for their subscriptions in that no-one else can attend the conference. The conference is “referable” to the aims of the union and no non-members are charged for admittance. The element of the subscription that relates to the event is exempt if the event is self financing. However, where the separate charge is subsidised by subscriptions, the element of the subscription acts as a prepayment for admission and fails to satisfy the criterion that there should be no charge in addition to the subscription. The admission charges paid by members to attend the conference will be standard-rated.
  * Admission is free to members, but non-members have to pay an admission charge The free admission for members is a benefit supplied in return for the subscription. The conference is “referable” to the union’s aims but there is an admission charge to non-members rendered taxable by “Note 1” to the Item. The charges received from non-members and an appropriate element of the subscription will be standard-rated.
  * There is a charge for non-members and a lower one for members If the event is self-financing, then the benefit supplied in return for the subscription is the right to a discount. The event is “referable” to the trade union’s aims, and there is no additional charge to the members for this particular right enabling an appropriate element of the subscription to be exempt. However, if the members’ charge for admission is subsidised by subscriptions then the appropriate element of the subscription is part payment for admission. The admission is not available without further payment and so exemption does not apply. Charges made to members and non-members will be standard-rated.
  ### One-day convention  
  * Entry is free to members and non-members. The event is generally advertised to attract as much attendance as possible from the general public. There is no benefit to the members - no part of the subscription relates to an admission entitlement because it is equally available to the public for free. The event may be non-business because there are no supplies for consideration.

 

Remember - you should always consider the liability of the event concerned, because where an organisation is not exempt under “Group 9”, exemption may be possible under some other exemption group: for example the event may be a training seminar or a one-off fund-raiser.