Looking at VAT Notice 701/45 Sports and VAT Notice 701/5 Clubs and Associations can anyone clarify the VAT position on social membership fees?
Its clear from reading the above that Sporting Section subscriptions are Exempt, but Im still confused how to treat social member subs. Bearing in mind that no benefits are afforded members that a non-member would enjoy, do we have a case for treating social membership fees as outside of scope for VAT (donation)? Adult membership is £12.50 per annum, but they pay the same bar prices as would a non-member who was invited along.
Hi Kevin. Edit profile - signature It's only so we don't say oi you every time. Tell us a bit about yourself, where based etc. Presumably you're self employed?
__________________
John
Any advice given is for general guidance and professional advice should be sought applicable to your circumstances.
Dont be offended, just me trying to type too fast!
Im offering some help to a Sports & Social club treasurer. The club (non-profit making organisation) has various sporting sections as well as some social members who are not active members of any of the sporting sections. The subs to the sporting sections look as if they are exempt, but for the social members they are standard rated. However it seems from the VAT notice that if they are treated as a donation they could be out of scope. Was looking for some views on whether they could treat them this way if the members are not entitled to anything extra from what a non-member gets.
As I said previously, they only pay a nominal £12.50 per annum & theres nothing in return (printed matter or discounts).
But, if the subscription entitles them to membership, then it must be taxable at 20%.
Presumably the Constitution or other governing document prescribes the benefits of membership.
Hi Les
I take it from the fact that a member of the public cannot walk in off the street that membership, even if not really detailed in the governing document (which I take it isnt, given Kevin's comments!) is, even just merely having exclusivity to the club. Ergo - standard rated.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I guess its the following text Im pondering over from VAT Notice 701/5. It seems that apart from being able to use the club, there are no benefits a non-member cant enjoy once signed in. I was shifting my thinking towards standard rate, but the paragraphs below got me thinking.
5.2 Subscriptions which are voluntary payments or donations
If the whole of the subscription is an entirely voluntary payment and secures nothing or only nominal benefits in return, then it is all a donation and you must treat it as being outside the scope of VAT.
If you believe that your subscriptions include a voluntary payment or donation see paragraph 5.3 below.
5.3 Subscriptions which may include a voluntary payment or donation
You may only treat part of your subscription as a voluntary payment or donation if either:
all the substantive benefits provided are available to non-members at no charge or more cheaply than the subscription. You should ignore any nominal benefits (see paragraph 5.1 above)
Firstly I would stop looking at the vat guides if I were you. They are HMRCs interpretation of the actual law and as far as I'm aware in this particular arena fall woefully short of realit (more so than some of their other guides!). Really you should look at the VAT Act itself and specifically case law on such matters, especially recent ones.
Secondly this is a complex area, so without any specific knowledge or training in this area, I would be careful advising as it could compromise your position with your PII and leave you open to a suit. I would suggest, given the club is not small (well it at least generates enough income to be vat reg) that they engage the services of a VAT expert. There is still insufficient information here to provide a proper and informed view. Various documents needs reviewing(including I would suggest any newsletters etc published by the org), as does the 'intent' used in running the club.
BTW, Les is a VAT expert. He is heavily involved in VAT for charitable organisations. I would suggest the club looks to engage his services, as a mistake could provide by costly for all concerned. Assuming Les is happy to take them on as a client (hope you don't mind Les, sure you could recommend or suggest someone if not)
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
