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Sports Governing Bodies -VAT treatment of affiliation fees

»Ê¹ÚÌåÓýapp Canterbury hockey clubs case (C-253/07) concerned members-only sports clubs to which, members paid an annual subscription for their membership rights. »Ê¹ÚÌåÓýapp hockey clubs were unincorporated associations without legal personality. »Ê¹ÚÌåÓýappse clubs were members of England Hockey, a non-profit- making organisation which existed for the encouragement and development of playing hockey. England Hockey charged affiliation fees in consideration for the service it provided to the hockey clubs.

»Ê¹ÚÌåÓýapp Court of Justice decided that supplies were exempt where:

• the services were closely linked and essential to sport;
• the true beneficiaries of the service were individuals taking part in sport; and
• the supply was made by a non-profit-making body.

With effect from 1 September 2010, HMRC changed its treatment of such affiliation fees to exempt them, irrespective of how the fee was calculated by the governing body.

Supplies made to commercial profit-making organisations (for example professional football clubs) will not normally be exempt because the true beneficiary is predominantly the organisation and not the individuals taking part in sport.

Sports clubs: VAT Treatment of affiliation fees

»Ê¹ÚÌåÓýapp individual clubs often make an onward recharge to their members in respect of the affiliation fees. Where the clubs are non-profit making, the supply of this affiliation fee to their individual members is exempt from VAT.

However, if the club is a profit-making commercial club, then the supply to their individual members is standard rated.

Until 31 March 2018, there is an extra-statutory concession enabling profit-making commercial clubs to treat the recharges of affiliation fees to their individual members as disbursements and therefore outside the scope of VAT. In order to qualify as a disbursement, the conditions set out in paragraph 25.1.1 of Notice No 700 must be strictly fulfilled.

From 1 April 2018, this concession is withdrawn and the recharge of affiliation fees by profit-making commercial clubs is treated as part of the charge for the facilities to play golf and is therefore standard-rated.