VAT treatment of businesses providing sports pitches

HM Revenue and Customs (HMRC) has announced a change in its policy on the VAT treatment of businesses providing sports pitches together with administration/management services for organised sports leagues and competitions.

HMRC now accepts that such activities may, where operated in circumstances similar to Goals Soccer Centres (GSC), constitute separate exempt supplies of land and standard-rated (ie, 20 per cent) supplies of administration services.

This change follows the First Tier Tribunal (FTT) decision in the case of GSC. GSC owned a sports centre with a number of five-a-side football pitches. It organised and administered competitive football leagues and competitions and charged the teams that participated. The business took the view that, for VAT purposes, this charge was for an exempt supply of land. HMRC disagreed and argued that the charge was for a standard-rated supply of the right to participate in an organised football league.

The FTT found that there were two separate supplies being made:

• A supply of land (the pitches), which was exempt.
• A supply of administration and management services, which was standard-rated.

HMRC has accepted that the decision of the FTT is applicable to all traders who operate in circumstances akin to GSC. This includes traders who hire the pitches from third parties such as local authorities, schools and clubs. However, exemption will only apply where there is a series of lets covering ten or more periods where:

• Each period is in respect of the same activity carried on at the same place.
• The interval between each period is not less than one day and not more than 14 days.
• Consideration is payable by reference to the whole series and is evidenced by written agreement.
• The grantee has exclusive use of the facilities.
• The grantee is a school, a club, an association or an organisation representing affiliated clubs or constituent associations.

Where a single price is charged to the customer, businesses will need to determine the value of the two different supplies to establish the correct amount of VAT due. Whatever method is adopted to do this, there must be sufficient documentary evidence kept to show how a business has arrived at a fair and reasonable apportionment.