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HMRC internal manual

VAT Youth Clubs

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HM Revenue & Customs
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Youth clubs: Youth Clubs and associations of Youth Clubs: The meaning of youth club: Supplies by a non profit making organisation

The Principal VAT Directive (PVD) Art 132(1)(g) exempts welfare services by charitable organisations. This has been interpreted by UK law in Note 1(e)(i) and (ii) of Group 6, Schedule 9 of the VAT Act 1994 in respect of youth clubs to mean:

a body that is precluded from distributing and does not distribute any profit it makes; and applies any profits made from supplies of a description within this Group to the continuance or improvement of such supplies.

This legal definition came as a result of the tribunal decision in International Gymnastics School Ltd (LON/91/186x), where despite the fact that the club intentionally did not make a profit, the Tribunal considered the ability of the club to declare dividends under the terms of its own constitution was sufficient reason to exclude the club from charitable status.