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HMRC internal manual

VAT Valuation Manual

Specific applications: apportionment and valuation of membership benefits: sports clubs and the sporting exemption

Since 1 April 1994, Item 3 of Group 10 of Schedule 9 to the VATA 1994 has provided for the exemption of many sporting services supplied by non-profit making sports clubs to their members. In many cases, therefore, subscriptions are now exempt, whereas before they were standard-rated. The arrangements explained in VATVAL11520 to VATVAL11590 were frequently employed by such clubs as a means of trying to dissociate additional consideration from taxable supplies to the members by presenting it as, or attaching it to, exempt financial supplies. You are less likely to encounter these devices now that many of the supplies qualify for exemption. However, the change of liability does not alter the supply/consideration position and you may, for example, still have to perform the notional interest calculation to include the relevant amount amongst a trader’s exempt income. The consideration can still relate to standard-rated supplies in the following cases:

  • where the member is a non-playing member, such as a social member, and receives no exempt sports entitlements
  • where the member receives both standard-rated and exempt supplies and his subscription is apportioned accordingly, or
  • where the club making the supplies is not non-profit making and so barred from the exemption.

As a concessionary and de-regulatory policy measure, clubs that qualified for the exemption have been permitted to treat playing members’ subscriptions as wholly exempt and those of non-playing members as wholly standard rated provided the “non-sporting benefits” are not significant. There have been instances where clubs have then attempted to claim an exempt element in non-playing members’ subscriptions, for example for use of a pool table, whilst still wishing to treat playing members’ subscriptions as wholly exempt. In such cases, as when non-playing benefits are significant for playing members, full apportionment of all classes of subscription should be required.

Subscriptions with a donation: formula for valuing discounted admissions. Please see VBNB60550 

Apportionment of subscription income - introduction. Please see VBNB60600.