The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of the main VAT rules relating to supplies of sport and physical recreation.
The VAT exemption covers:
the provision of sport and physical recreation by an eligible body
entry to eligible sport and physical recreation competitions (see the Exemption ― sport ― VAT treatment of various sporting services guidance note)
An eligible body is an organisation that meets all of the following criteria:
it is a non-profit making organisation
the organisation’s constitution includes a non-distribution clause or limits the distribution of any profits / reserves to:
another non-profit making club
its members if the organisation is either wound up or dissolved
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
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
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 in itself is not sufficient
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