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 133(a) enables the exemption for welfare services to be restricted to not-for-profit bodies. This has been implemented in UK Law for youth clubs by Note 1(e) (i) and (ii) of Group 6, Schedule 9 of the VAT Act 1994 and restricts exemption to:
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.