By way of background there are many cases where a sport’s governing body, or similar umbrella organisation, often 
charges an affiliation fee to individual clubs who make an onward charge to their members. 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 member is standard rated.
HMRC’s concession was aimed to put profit-making commercial clubs in a similar position to non-profit making clubs, so that they didn’t need to account for output tax on the fee charged. It achieved this by allowing profit-making commercial clubs to treat these re-charges to their members as though they were disbursements.
However, as such re-charges of affiliation fees aren’t legally disbursements, the concession goes beyond HMRC’s discretion and is being withdrawn with effect from 1 April 2018.
The concession is currently published in paragraph 3.6.2 of VAT Notice 701/45.
HMRC consulted and called for evidence on the withdrawal of the concession in January 2017.
Since no difficulties were raised, the government has decided to announce withdrawal now so that clubs can make arrangements to charge VAT on these charges with effect from 1 April 2018. You can read more on the .Gov website.
Our VAT experts have considerable experience of working with national sports governing bodies and can help you assess the implications of the change. They may also be able to identify other areas of such organisations’ running costs and income that could benefit from a VAT review.
Why not get in touch today to discuss how we may be able to work together.
