Exemption ― sport and physical recreation

Produced by Tolley

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Exemption ― sport and physical recreation
  • What does the VAT exemption include?
  • What is an eligible body?
  • When is an organisation non-profit making?
  • Commercial influence
  • Commercial influence
  • Exempt sporting activities
  • Exempt sports and physical recreation
  • Services closely linked and essential to sport or physical recreation
  • Individuals
  • More...

Exemption ― sport and physical recreation

This guidance note provides an overview of the main VAT rules relating to supplies of sport and physical recreation.

What does the VAT exemption include?

The VAT exemption covers:

  1. the provision of sport and physical recreation by an eligible body

  2. entry to eligible sport and physical recreation competitions (see the Exemption ― sport ― VAT treatment of various sporting services guidance note)

What is an eligible body?

An eligible body is an organisation that meets all of the following criteria:

  1. it is a non-profit making organisation

  2. the organisation’s constitution includes a non-distribution clause or limits the distribution of any profits / reserves to:

    1. another non-profit making club

    2. its members if the organisation is either wound up or dissolved

  1. the organisation uses all profits / surpluses from its playing activities to maintain or improve the related facilities or for the overall activities of the non-profit making organisation

  2. the organisation is not subject to any commercial influences or part of a wider commercial organisation (see the Exemption ― sport and physical recreation ― commercial influence guidance note)

VSPORT2010, VSPORT1030; Value Added Tax (Sport, Sports Competitions and Physical Education) Order 1999, SI 1999/1994

When is an organisation non-profit making?

The constitution should outline the main purpose of the organisation and whether the organisation has the ability to distribute profits or surplus income. The organisation should have a non-distribution clause in its constitution. There is no prescribed format for one of these types of clauses. However, some sample clauses are included in the attached document.

See the Exempt ― sport and physical recreation ― example non-distribution clauses guidance note.

For anti-avoidance purposes, HMRC will be looking at the body’s constitution, its activities and its use of funds to ascertain whether it was established with a purpose, intention or motive to exclude distribution of profits or surpluses by covert of overt means to other parties with a financial interest in the body (ie an associated person). The use of a non-distribution clause

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