Guidance

Sport supplies that are VAT exempt (VAT Notice 701/45)

Check which supplies of sport, physical recreation, and physical education services qualify for exemption from VAT.

From:
HM Revenue & Customs
Published
2 August 2011

Details

This notice cancels and replaces VAT Notice 701/45 Sport and physical education (August 2011). It’s been updated to reflect the changes in the law with effect from 1 January 2015 relating to membership.

You must read it in conjunction with Clubs and associations’ VAT responsibilities (VAT Notice 701/5) and the section on sports facilities and physical recreation in Land and property (VAT Notice 742).

1. Overview

1.1 What this notice is about

This notice describes which supplies of sport, physical recreation, and physical education services qualify for exemption from VAT. It explains the scope of the exemption from VAT for:

  • certain sporting and physical education services supplied by ‘eligible bodies’ and details how it works in practice
  • competition entry fees and how it works in practice for promoters of competitions in sport and physical recreation

1.2 The law covering this exemption

The legal provisions covering this exemption are in the:

  • VAT Act 1994, Schedule 9, Group 10 as amended by the Value Added Tax (Sport) Order 2014 (SI 2014/3185)
  • Income Tax (Earnings and Pensions) Act 2003 and the Corporation Tax Act 2010 which are cross-referred to in Group 10

1.3 Where to find more information on the exemption for fund-raising events

You can find more information in Charity fundraising events: exemptions.

2. An overview of the exemption for sporting and physical education services

2.1 What the exemption covers

The exemption covers:

  • certain sporting and physical education services by eligible bodies (see section 3 and section 4)
  • entry to certain competitions in sport or physical recreation (see section 6)

2.2 How the exemption has changed

From 1 January 2000 the exemption for sporting services which was available to all non-profit-making bodies was restricted to supplies by eligible bodies. The term eligible body is explained in section 4, but, in summary, an eligible body must:

  • be non-profit-making
  • have in its constitution restrictions on the distribution of profits
  • not be subject to either commercial influence or part of a wider commercial undertaking

Commercial influence is explained in section 5 but you are likely to be subject to the commercial influence test if, within the 3 years preceding the relevant sports supply, you either:

  • paid a salary or bonus calculated by reference to profits or gross income to anyone who was an officer or a shadow officer of the club, or was connected with such an officer
  • bought certain goods or services (called ‘relevant supplies’) from anyone, who was:
    • an officer or shadow officer of the club
    • acting as an intermediary between the club and the officer
    • or connected with any such person

2.3 Incurring VAT on goods and services you buy in

There are no special rules on goods and services supplied to sports bodies. If your club is not a charitable body it will not qualify for the reliefs available to charities described in How VAT affects charities (VAT Notice 701/1), Goods or services supplied to charities (VAT Notice 701/58) or VAT Notice 708: buildings and construction.

Even if you are a charitable body that is also an eligible body, your club will be charged VAT on most goods and services you buy in, including building work such as the construction of pavilions, clubhouses and facilities for playing sport.

Paragraph 2.5 explains that you might not be able to reclaim all or any of the VAT you incur. We strongly suggest that you budget for any irrecoverable VAT when considering your future expenditure, particularly when undertaking major projects. Applications for grants (such as those funded by the National Lottery) should take account of any irrecoverable VAT.

2.4 Reclaim the VAT you incur on non-business activities as input tax

You may incur VAT on goods or services you will use wholly for the purpose of a non-business activity (see Clubs and associations’ VAT responsibilities (VAT Notice 701/5)). This VAT is not input tax and you cannot reclaim it. This is because such activities are outside the scope of VAT and you do not have to account for output VAT on them.

If goods or services are bought partly for business and partly for non-business purposes you must apportion the VAT you incur to reflect the amount attributable to your business activities. This is the amount you can reclaim.

Since 1 January 2011 the option of Lennartz accounting for the buying of goods used for business and non-business purposes has ceased. This is described in The Finance (No 3) Act 2010.

For further information see VAT guide (VAT Notice 700).

2.5 Reclaim the VAT you incur on business activities as input tax

As a VAT-registered business, you are entitled to deduct the input tax incurred on costs that you use or intend to use in making taxable supplies. You cannot normally deduct input tax incurred on costs that relate to exempt supplies that you make. If your input tax relates to both taxable and exempt supplies, you can normally deduct only the amount of input tax that relates to your taxable supplies, subject to certain de minimis rules.

3. Sporting services exempt from VAT

This section describes when sporting and physical education services are exempt from VAT.

3.1 Basic conditions

Your organisation’s services are exempt only when all the following conditions are met.

Condition Description Further information
1 Your organisation engages in activities included within the meaning of ‘sports and physical education’ paragraph 3.2
2 It supplies services that are closely linked with and essential to sport or physical education paragraph 3.3
3 It supplies services to an individual, and paragraph 3.4
4 It is an eligible body section 4

If you let facilities for playing any sport or for taking part in any physical recreation, you may be supplying an interest in, a right over, or a license to occupy land. These supplies are normally standard-rated. But if the let is for more than 24 hours or is for a series of 10 or more sessions, subject to conditions, then, your supply may be exempt. For more information see the section on sports facilities and physical recreation in Land and property (VAT Notice 742).

3.2 Sports and physical education activities which qualify for exemption

Activities
Aikido Gymnastics Roller Hockey
American Football Handball Roller Skating
Angling Hang or Para Gliding Rounders
Archery Highland Games Rowing
Arm Wrestling Hockey Rugby League
Association Football Horse Racing Rugby Union
Athletics Hovering Sailing or yachting (includes canal cruising)
Badminton Hurling Sand and Land Yachting
Ballooning Ice Hockey Shinty
Baseball Ice Skating Shooting
Basketball Jet Skiing Skateboarding
Baton Twirling Jiu Jitsu Skiing
Biathlon Judo Skipping
Bicycle Polo Kabaddi Snooker
Billiards Karate Snowboarding
Bobsleigh Kendo Softball
Boccia Korfball Sombo or Sambo Wrestling
Bowls Lacrosse Squash
Boxing Lawn Tennis Stoolball
Camogie Life Saving Street Hockey
Canoeing Luge Sub-Aqua
Caving Modern Pentathlon Surf Life Saving
Chinese Martial Arts Motor Cycling Surfing
Cricket Motor Sports Swimming
Croquet Mountaineering Table Tennis
Crossbow Movement and Dance Taekwondo
Curling Netball Tang Soo Do
Cycling Octopush Tchoukball
Dragon Boat Racing Orienteering Tenpin Bowling (includes skittles)
Dance Parachuting Trampolining
Darts Petanque Triathlon
Equestrian Polo Tug of War
Exercise and Fitness Pony Trekking Unihoc
Fencing Pool Volleyball
Field Sports Quoits Water Skiing
Fives Racketball Weightlifting
Flying (includes those model flying activities, in which competence is dependent on physical skill or fitness) Rackets Wrestling
Gaelic Football Racquetball Yoga
Gliding Rambling  
Golf Real Tennis  

If an activity is not included on this list you can write to the VAT enquiries team with full details of the activity and we will consider whether the activity is a sport within the meaning of the sports exemption.

3.3 Services closely linked with, and essential to, sport or physical education

3.3.1 General

The following are considered to be supplies closely linked with and essential to sport or physical education:

  • playing, competing, refereeing, umpiring, judging, coaching or training (but not attending as a spectator or involvement in administration)
  • use of changing rooms, showers and playing equipment together with storage of equipment essential to the sporting activity
  • match fees charged by an eligible body for use of the playing facilities
  • mooring, hangarage and use of workshop facilities (but not the use of parts, or the services of an engineer)

3.3.2 Sports coaching

Sports coaching by professionals is not within the exemption as it is not supplied by an eligible body, see section 4.

But such coaching may fall within the scope of VAT exemption for education. Education and vocational training (VAT Notice 701/30), gives more information on coaching and tuition.

3.3.3 If you’re a self-employed referee and registered for VAT

Your supply is not exempt from VAT because you’re not an eligible body, see section 4.

3.3.4 How to treat match fees covering more than the use of playing facilities

Where the match fees you charge cover a share of pitch hire (for example), catering (standard-rated) and transport (zero-rated) you should consider the rules concerning transactions which cover more than one element and also distinguish between single and multiple supplies, as explained in Clubs and associations’ VAT responsibilities (VAT Notice 701/5). You may have to apportion the fees in accordance with the guidance in VAT guide (VAT Notice 700).

3.3.5 Services that are specifically excluded from exemption

These are services that are specifically excluded from exemption, supplies of:

3.4 Who you must supply your services to

To qualify for exemption, you must be an eligible body, see section 4 and supply your services to individuals taking part in the activity.

3.4.1 What the term individual means

For the purposes of this exemption, an individual is a person who actually takes part in the sporting or physical education activity and this includes:

  • family groups
  • informal groups, where one individual makes a booking on behalf of a group of users of the sporting facilities
  • corporate persons and unincorporated associations, provided that the supplies are closely linked and essential to sport, that they are supplied by non-profit making organisations and that the true beneficiaries are individuals taking part in sport

Where a corporate body buys a golf day or similar for its own purposes such as to entertain its staff or guests, this is a not a supply made to individuals but a supply to the corporate body for its own benefit and the corporate body is the true beneficiary of the sporting services.

Such supplies by non-profit making members’ golf clubs or members’ sports clubs do not qualify for the exemption and are therefore standard-rated for VAT purposes.

But if the employees of a company buy a golf day or similar and largely meet the cost themselves, for example, through a social club, the supply is made to those individuals. This applies even where there is a small subsidy from the company and even if the invoice is received by the company, provided there is only a limited and ancillary benefit to the company through its contribution. In those limited circumstances, the non-profit making members’ golf or sports club can exempt the supplies as supplies made to individuals.

Additionally, situations may arise where an unincorporated golf society (as distinct from a golf club) buys a golf day at another golf club on behalf of its members. In such cases, that’s considered to be a supply to the individual members of the golf society, rather than to the unincorporated society itself.

Supplies for the benefit of individuals under the Tour Operators’ Margin scheme

Where a sports club supplies the use of sporting facilities to an individual taking part in sport as a result of an agreement with a travel agent or tour operator, the supplies can be treated as exempt supplies in the following circumstances, the:

  • golf or sports club directly invoices their supply to each individual taking part in the sporting activities (in situations where the travel agent or tour operator acts only as an intermediary in arranging the supply)
  • sports club supplies the use of sporting facilities to a tour operator for supply to an individual or sports club under the Tour Operators’ Margin Scheme (TOMS)

In these situations, the supplies are treated as exempt for VAT purposes as long as the golf or sports club is an eligible body.

Other supplies to businesses are not treated as being for the direct benefit of the individual and are standard-rated for VAT purposes.

3.4.2 The VAT liability of various sporting services

The following table applies the meanings of terms used in paragraphs 3.3 and 3.4 to show the VAT liability of various services when supplied by eligible bodies. For a full explanation of the term eligible body see section 4.

Nature of service VAT liability
Use of changing rooms, showers and playing equipment, trolley and locker hire, and storage of equipment essential to sport Exempt
Provision of playing area for example, court, pitch or green fees Exempt
Use of multi-sport playing facilities Exempt
Refereeing, umpiring, judging and coaching services Exempt (this excludes supplies by a self-employed referee, golf professional, see sub-paragraph 3.3.3)
Membership subscriptions and joining fees covering active participation in sport Exempt, subject to sub-paragraphs 3.5.1 and 3.5.9
Social or non-playing membership subscriptions Standard-rated
Fee for remaining on waiting list for membership Standard-rated or Exempt, see sub-paragraph 3.5.3
Admission charges for spectators Standard-rated
Use of residential accommodation Standard-rated, subject to sub-paragraph 3.3.5
Use of transport Standard-rated, subject to sub-paragraph 3.3.5
Catering, bars, gaming machines and social functions Standard-rated
Match fees for the use of playing facilities Exempt, subject to sub-paragraph 3.3.4
Match fees covering the cost of catering and transport Standard-rated, subject to sub-paragraph 3.3.5
Mooring, hangarage and use of workshops (but not the use of parts or services of an engineer) Exempt
Parking Standard-rated
Buggy hire Standard-rated
Sponsorship income Standard-rated

3.5 Subscriptions and other payments

3.5.1 Subscription qualifying for exemption

The subscription is a type of payment received in return for supplies of sporting services. The subscription is exempt if the services, that is the benefits, facilities and advantages of membership, meet the conditions shown at paragraph 3.1.

3.5.2 Joining fees

Joining fees qualify for exemption where the benefits you supply in return are the same as for the subscription and the subscription is itself exempt. But if the joining fee entitles the member to different benefits, you must, where appropriate, account for VAT based on the liability of those benefits.

3.5.3 Waiting lists

A charge to be placed on a waiting list is exempt if it’s both:

  • deducted from the new member’s first subscription or entrance fee, and the subscription or fee itself will qualify for exemption
  • refundable in the event that the candidate fails to become a member for any reason, including voluntary withdrawal

In all other circumstances the fee is consideration for the right to be on the waiting list and is standard-rated.

3.5.4 Life membership subscriptions

Life membership subscriptions are exempt if the subscription entitles the member to playing services for life and the annual subscription is exempt.

3.5.5 Supplies to social and non-playing members

Supplies to social and non-playing members are not exempt. Payments, including subscriptions, for social and non-playing membership of a sports club are consideration for standard-rated services.

3.5.6 Social clubs

Social facilities you supply to your members in return for their subscription are standard-rated. If you also supply zero-rated benefits (for example, a magazine for members) and exempt benefits (for example, use of sporting facilities such as pool or snooker tables) in return for your subscription, you must consider the correct treatment of your supply under the terms of sub-paragraph 3.5.9.

You should treat as exempt any additional amounts the members pay to use sports facilities such as pool or snooker tables.

If your organisation is a social club you should refer to Clubs and associations’ VAT responsibilities (VAT Notice 701/5).

3.5.7 Artisans’ golf clubs

Membership fees charged to individual members of artisans’ golf clubs are exempt from VAT, as are the charges made by the host club to an artisans’ golf club.

3.5.8 Leisure trusts providing all-inclusive membership schemes

Businesses that will be most affected are community leisure centres that are run by non-profit making trusts. In most cases a typical customer who buys an all-inclusive package will have access to a range of facilities at the leisure centre. VAT liability depends on the nature of the supply which has to be decided at the time the all-inclusive fee is paid. Where the supply is a single supply that would be artificial to split, there can only be one overarching liability.

In most cases, the typical consumer who buys an all-inclusive package will have access to a range of facilities at the leisure centre. Usually most of these facilities would, if supplied individually, be exempt as services closely linked with and essential to sport or physical education in which the individual is taking part, (for example, use of swimming pools, courts, pitches showers, changing rooms).

Therefore, in cases where the predominant reason for buying an all-inclusive package is to use the range of available sports facilities, the single supply is exempt.

If the predominant reason a typical consumer buys an all-inclusive package is to make use of standard-rated facilities (for example use of a sauna) the single supply is standard-rated.

3.5.9 Clubs and associations

Apportioning subscriptions covering a mixture of exempt, zero-rated or standard-rated supplies

Clubs and associations will often supply a number of different benefits in return for their subscriptions. This means they make supplies with more than one element. If your club is in this position you need to read Clubs and associations’ VAT responsibilities (VAT Notice 701/5) and decide whether your subscription is consideration for a single supply or consideration for a multiple supply.

If your subscription is consideration for a multiple supply under the terms of that notice and the separate elements have different liabilities you must apportion your subscription between those different elements. Brief guidance on how to apportion is shown in Clubs and associations’ VAT responsibilities (VAT Notice 701/5).

But in most cases there is one principal benefit or reason for joining. Other benefits supplied such as literature are less important. In these circumstances, your subscription is consideration for a single supply and its liability is determined by the liability of the main benefit. No apportionment may be made.

There is an exception for non-profit making bodies, which supply a mixture of benefits with different VAT liabilities. As a concession, these bodies may apportion their subscriptions to reflect the value and VAT liability of each individual benefit, even if they are consideration for a single supply. This is explained in more detail in Clubs and associations’ VAT responsibilities (VAT Notice 701/5). VAT guide (VAT Notice 700) explains apportionment and the methods that may be used.

Taking advantage of the concession

If you do wish to apportion, for example, subscriptions to cover separate benefits such as zero-rated printed matter, you must apportion all types and elements of subscriptions on a fair and reasonable basis, in other words you cannot pick and choose elements, and retrospective apportionment is not allowed.

3.5.10 How input tax is calculated in the case of subscriptions apportioned between exempt, zero-rated or standard-rated supplies

Where subscriptions are apportioned, you should attribute any VAT incurred to the individual elements on the basis which is set out in Partial exemption (VAT Notice 706). For example input tax:

  • directly attributable to taxable (includes zero-rated) supplies and fully recoverable will normally include that incurred on bar stock and refurbishment to the ‘behind the bar’ area
  • attributable to both taxable and exempt supplies is ‘residual input tax’ and will normally include that incurred on furnishings and refurbishment on the ‘front of the bar’ area and clubhouses generally as well as VAT incurred on those sports facilities which are available to all participants
  • directly attributable to exempt supplies and non-recoverable will normally include VAT incurred on sports facilities not available to temporary members or visitors

3.5.11 If your club issues swipe cards, vouchers and other types of payment credits

The VAT treatment of these payments and credits is described in Clubs and associations’ VAT responsibilities (VAT Notice 701/5).

3.5.12 Raising of capital from members by loans, levies, shares and debentures

If you require your members to make a loan, pay a levy or buy shares or debentures, by doing so they will be paying consideration, or additional consideration, for your supply of the benefits of membership, and you will have to account for VAT on the value of that consideration.

You can find more about this in Clubs and associations’ VAT responsibilities (VAT Notice 701/5).

3.6 Sports governing bodies

3.6.1 Exempt affiliation fees if you’re a non-profit making sports governing body

You can exempt affiliation fees, but only where the fees are for services closely linked and essential to sport that they are supplied by non-profit making organisations, and that the true beneficiaries are individuals taking part in sport.

Supplies to commercial organisations should be treated as taxable since the true beneficiary of the service is unlikely to be individual taking part in the sport.

Where the affiliation fee confers a number of benefits, which individually would be liable to different VAT treatment, the advice in section 4 of Clubs and associations’ VAT responsibilities (VAT Notice 701/5) will help you to determine whether there is a single or multiple supply.

Where the conditions of Extra Statutory Concession 3.35 (apportionment of membership subscriptions to certain non-profit- making bodies) are met, governing bodies may continue to take advantage of the option to apportion their affiliation fees between the rates of VAT applicable to the individual elements.

But where the principal benefit is of priority purchase rights for tickets of admission to international matches or tournaments, the fee is standard-rated.

3.6.2 How your club must treat membership fees charged by a governing body

Treatment until 31 March 2018

Your club can treat membership fees charged by a governing body as disbursements for VAT purposes where the:

  • affiliation fee charged by the governing body qualifies for exemption
  • principal beneficiary of the services supplied by the governing body is the individual sports person
  • club itemises the fee separately from its subscription or charge to the individual member or customer on its’ tax invoice
  • amount charged by the club to the individual member or customer does not exceed the fee charged by the governing body

Provided these conditions are met, clubs can treat the onward charge of the affiliation fee to the member or customer as outside the scope of VAT.

Treatment with effect from 1 April 2018

From 1 April 2018, the above concession is withdrawn. This means that profit-making commercial clubs can no longer treat membership fees charged by a governing body as disbursements for VAT purposes.

3.7 How disciplinary income is treated

If individuals taking part in sport break rules or are undisciplined, clubs or national associations may have the authority to fine them. Disciplinary income is not consideration for any supply to the individual paying the fines and is outside the scope of VAT.

But the activity of enforcing the club or national association rules is part of the body’s business activities. Any tax on costs of providing rule enforcement and disciplinary services is therefore input tax. The ability to recover this input tax will be determined under the partial exemption rules. In particular, input tax recovery will depend on the supplies to which the disciplinary services relate, for example, affiliation fees or the right to enter competitions. You will need to determine the liability of the relevant supplies in accordance with this notice and attribute the costs correspondingly. If the costs cannot be wholly attributed to either exempt or taxable supplies you must treat it as non-attributable input tax.

4. Eligible body

4.1 An eligible body

Your organisation is an eligible body when:

  • it is non-profit making
  • its constitution includes a non-distribution clause or limits any distribution of profits or surpluses to:
    • another non-profit making club
    • or its members on winding up or dissolution
  • it actually uses all profits or surpluses from its playing activities to maintain or improve the related facilities or the purposes of a non-profit making body
  • it is not subject to commercial influence nor part of a wider commercial undertaking

The rest of the section explains how your organisation may meet the first 3 conditions and qualify as an eligible body. For the meaning of commercial influence see section 5.

4.2 How to decide whether a body is non-profit making

By looking at the body’s constitution, its activities and its use of funds to determine whether it was established with a purpose, intention or motive which exclude distribution of profit or surplus by overt or covert means to those with a financial interest in it, including if a corporate body its members.

A non-distribution clause in the constitution of an organisation does not, in itself, answer this question.

4.3 Non-distribution clauses

Your organisation must include a clause in its constitution that prevents distribution of any profits and surplus or limits their distribution to either:

  • another non-profit making body
  • its members on winding up or dissolution

The following examples of non-distribution clauses are designed to assist you and are not mandatory.

Type of body Examples of acceptable clauses
Unincorporated club The club is a non-profit making organisation. All profit and surpluses will be used to maintain or improve the club’s facilities. No profit or surplus will be distributed other than to another non-profit making body or to members on winding up or dissolution of the club.
Company limited by guarantee The income and property of the company shall be applied solely towards the promotion of its objects as set forth in this Memorandum of Association and no portion thereof shall be paid or transferred directly or indirectly by way of dividend, bonus or otherwise howsoever by way of profit, to members of the company and no director of the company shall be paid by salary or fees, or receive any remuneration or other benefit in money or money’s worth from the company for discharging his duties as such.

If upon winding up or dissolution of the company there remains, after the satisfaction of all its debts and liabilities, any property whatsoever, the same shall not be paid to or distributed among the members of the company, but shall be given or transferred to some other institution or institutions having objects similar to those of the company.

But if your organisation is a company limited by shares and formed before 1 October 2009, you will need to be familiar with the Companies Act 1985 and in particular:

  • Table A (SI 1985/805) which details the Regulations for management of a company limited by shares
  • Articles 102-108 which covers dividend arrangements
  • Article 110 which covers capitalisation of profits
  • Article 117 which covers winding up

We have accepted that the non-distribution condition will be satisfied by the passing of a resolution by the club to:

  • delete Articles 102-108 and 110
  • adopt a new Article preventing distributions by way of dividend, bonus and any other means

We have also accepted that adoption of Article 117 on winding up fulfils the winding-up criterion.

But if your company was formed after 1 October 2009 you will need to be familiar with the Companies Act 2006 and the Companies (Model Articles) Regulations 2008 (2008/ 3229) and in particular:

  • Articles 30-35 which cover dividend arrangements
  • Article 36 which covers capitalisation of profits

5. Commercial influence

Every time you make a sports supply, you must decide whether you are under commercial influence. If you are under commercial influence you are not an eligible body, (see section 4) and your sports supplies are standard-rated. A sports supply is a supply, which if made by an eligible body, would fall within the exemption for sporting and physical education services.

These rules look complicated because they are designed to counter complex tax avoidance schemes. Please contact the VAT helpline if you need any help.

5.1 When you are under commercial influence

This decision table explains when you are under commercial influence:

Step Decision Further information
1 On each occasion you make a charge for initial or renewal of playing subscriptions or make some other type of sports supply, decide which period is, for the purposes of that supply, the ‘relevant period’. Go to step 2. Relevant period is explained at paragraph 5.2
2 Was a ‘relevant supply’ made to you in the relevant period? Go to step 3. Relevant supply is explained at paragraphs 5.3 and 5.4.
3 Have you paid an ‘emolument’? Go to step 4. Emolument is explained at paragraph 5.5.
4 Does an ‘agreement’ exist for either or both of the following to take place after the end of the relevant period, namely, the making of a relevant supply to you or the payment by you of any emolument? Go to step 5. Agreement includes any arrangement or understanding (whether or not legally enforceable).
5 If you have answered yes to any of the questions at steps 2, 3 or 4 go to step 6. If you have answered no to all of the questions at steps 2, 3 and 4 you are not under ‘commercial influence’  
6 Was the relevant supply made by, an emolument paid to, or agreement made with a ‘person associated’ with you at that time it was made or paid? If yes, you are under commercial influence for that supply. If no, you are not under commercial influence for that supply. Person associated is explained at paragraph 5.6.

5.2 The relevant period

This table explains the meaning of relevant period:

For sports supplies made the relevant period runs
From 1 January 2000 to 31 December 2002 from 14 January 1999 to the time of the sports supply
1 January 2003 onwards for the 3 years leading up to the time of the sports supply

5.3 A relevant supply

This table explains the meaning of relevant supply:

A relevant supply is a Notes
grant of either any interest in or right over land or licence to occupy any land which at any time in the relevant period was or was expected to become sports land, and in the case of land in Scotland, of any personal right to call for or be granted any such interest or right, or of the use of sports land (that is, where rent is paid) under leases granted, varied or renewed after 31 March 1996 Grant includes an assignment or surrender. Sports land in relation to any body, means any land used or held for use for or in connection with the provision by that body of facilities for use for or in connection with sport or physical recreation, or both.
supply of any services in managing or administering any of its facilities  
supply of any goods or services for more than the normal market price  

5.4 Exceptions from relevant supplies

This table explains the circumstances in which a supply is not a ‘relevant supply’ despite meeting the terms of paragraph 5.3:

Supplies will not be relevant supplies if they are Notes
made by a charity or local authority  
made by a company to a club owned by that company and whose principal purpose is to provide employees of that company with sports facilities Employees in relation to a person, includes retired employees of that person.
a gift of sports land or of the use of sports land ‘Sports land’ in relation to any body, means any land used or held for use for, or in connection with, the provision by that body of facilities for use for, or in connection with, sport or physical recreation, or both.
of sports land and was made in return for a nominal amount In normal circumstances we will treat any payment below £1,000 as nominal and will give careful consideration to claims for higher amounts to be treated as nominal.
of the use of sports land and made in return for a nominal amount, provided that the original grant of land was also for a nominal amount.  

5.5 Meaning of emoluments

Emoluments include all salaries, fees, wages, perquisites and profits calculated or varied, wholly or partly, by reference to the:

  • profits from some or all of the activities of the body paying the emolument
  • level of that body’s gross income from some or all of its activities

Perquisites (perks) are allowances paid, or goods and services provided, over and above a settled wage.

5.6 What’s meant by ‘a person associated with’ a body

This table describes the legal persons who are associated with an eligible body:

Includes Meaning
Officer Includes any committee member, director or trustee of the body.
Shadow officer Someone in accordance with whose directions or instructions the officers or members of the body are accustomed to act.
Intermediary Anyone who acts between the body and persons associated with it, including other intermediaries, in the making of a ‘relevant supply’.
Person connected with another person associated with the body Has the meaning in the Corporation Tax Act 2010 (connected persons) (see paragraph 7.1), this includes anyone who is a relative or business partner of an officer, shadow officer or intermediary or connected by virtue of control of a company.

5.7 Further information

5.7.1 Payment of honoraria

Payment of honoraria will not disqualify your club from exemption. Where you pay an honorarium to the club secretary or treasurer, for example, this will not disqualify you from exemption, unless you calculate the amount by reference to your profits or gross income.

As we do not treat supplies of such services as management and administration, this will not disqualify you from exemption.

6. Exemption for competitions in sport and physical recreation

This section describes when you may exempt entry fees to certain sports competitions. An entry fee is the payment made for the right to enter a competition. A competition means a structured and organised contest, tournament or race where prizes or titles of some kind are awarded.

6.1 Scope of the exemption

Entry fees may qualify for exemption where they are for entry to a competition either:

  • in sport or physical education and the total amount of the entry fees charged is returned to the entrants of that competition as prizes
  • promoted by an eligible body, which is established for the purposes of sport or physical recreation

The highlighted terms are explained in this table.

Term Explanation
‘Sport or physical education’ See paragraph 3.2
‘Eligible body’ See section 4
‘Established for the purposes’ There is no legal definition. It includes a charitable trust set up to run a sports club or sports centre. It does not include local authorities, because they perform a wide range of functions and do not owe their existence to sport or physical recreation.
‘Sport and physical recreation’ This covers sports and physical education listed at paragraph 3.2 and physical recreation activities such as greyhound or pigeon racing and clay pigeon shooting. Activities that do not amount to sport or physical recreation, such as chess, card games, dominoes, and spot-the-ball and other newspaper competitions are excluded by the definition. Where animals are involved, it is important to distinguish between an animal show and activities which qualify as sport or physical recreation, such as a competition where the animals are assessed wholly or partially upon their sporting performance, for example jumping and racing.

6.2 When competition might fail to qualify

Competition might fail to qualify where all, or any, entry fees are carried forward as prizes or prize money to another competition.

6.3 If your organisation includes your normal charge for admission or use of your facilities in the entry fee

This does not exclude you from exemption, although you may need to apportion the fee between any exempt and taxable elements (see paragraph 6.4).

6.4 How to value your exempt entry fees

If the supply you are making is exempt the value of that exempt supply is normally the full amount of the entry fees received. You must not make any deduction for amounts you return as prizes.

But it’s only the supply of the right to enter the competition that is exempt. Where the ‘entry fee’ includes elements that are standard or zero-rated supplies, you must decide whether you are making a single supply or a multiple supply. You can find out more about this in Clubs and associations’ VAT responsibilities (VAT Notice 701/5) and in the VAT guide (VAT Notice 700).

6.5 Deduct input tax

You are entitled to deduct the input tax incurred on costs that you use or intend to use in making taxable supplies. You cannot normally deduct input tax incurred on costs that relate to your exempt supplies. If your input tax relates to both taxable and exempt supplies, you can normally deduct only the amount of input tax that relates to your taxable supplies.

For further information see the VAT guide (VAT Notice 700) and Partial exemption (VAT Notice 706).

6.6 Prizes, prize money and appearance money

Prizes and prize money awarded to, and appearance money paid to competitors, are always treated in the same way, regardless of whether the entry fees for the competition are exempt or taxable.

Prizes and prize money are outputs and appearance money is an input. Details of their treatment are shown in Clubs and associations’ VAT responsibilities (VAT Notice 701/5).

The main legal provision in this notice is Value Added Tax Act 1994, Schedule 9, Group 10 as amended by the Value Added Tax (Sport) Order 2014 (SI 2014/3185).

7.1 Other legal provisions

Other legal provisions include, the:

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Updates to this page

Published 2 August 2011

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