At the same time as Team GB is enjoying its share of Olympic glory, British five-a-side football teams are facing VAT demands for pitch hire in a controversial move that could see people giving up the sport.
If you’re confused about the VAT status of football pitch hire, you’re not alone. HMRC’s view of the VAT treatment of commercially operated sports leagues is being challenged as a number of Commercial organisations that run football and other sports leagues make vocal protests. So what’s going on?
Who is affected?
HMRC classifies ‘sports league providers’ as doing most or all of these things:
- organise a league and allocate fixtures to teams
- provide pitches , either their own or rented
- provide referees
- determine the results, keep and publish scores and league tables
- award trophies
Pitch payment VAT disputes
Pitch payments are collected in different ways. Some sports league providers make a one-off admin charge, some also charge a match fee for every game played. And that’s where the problems lie, with some providers suggesting that because they are supplying pitch hire, it should be VAT exempt.
HMRC disagrees, insisting that supplies made by sports league providers in fact “consist of a bundle of elements, which are integral to each other, but that it cannot be said that there is one principal element to which all others are ancillary”. In other words because the fee isn’t just for the land but all the other services in my list above, it’s much more than a mere ‘supply of land’. Far from being exempt, the transaction attracts the full 20% VAT.
Having said that, some not-for-profit organisations might end up paying no VAT because they fall under the HMRC’s Group 10 sports exemption. And the fee for simply hiring a pitch and nothing else will remain non-vatable.
HMRC accused of being ‘misleading’
Some sports league providers have asked HMRC to admit to giving misleading advice and consider future cases on an individual basis.
What to do if it’s you?
If you’re not certain of your VAT status as regards pitch hire, or you think you’ve been misled, it’s a good idea to contact their HMRC Complaints Team, especially if you’ve already acted on their advice and will suffer real problems if they insist on collecting the VAT retrospectively.
Alternatively contact me and I’ll clarify things out for you.