Clubs of all sizes will encounter VAT in their everyday activities whether registered for VAT purposes or not.
It is important that clubs are fully aware of the potential costs which VAT can create and arrange the way the club works to minimise the impact in terms of both cost and time spent dealing with it.
Failure to deal with VAT adequately can create costs not only of additional VAT but can also give rise to fines and interest charges for failure to comply on a timely basis.
VAT is a tax on business transactions and although most rugby clubs are not for profit organisations, and may be either a Community Amateur Sports Club (CASC) or charity, they invariably are involved in certain business activities. These could include the provision of facilities to members for a subscription, operation of bar and catering facilities, letting of the clubhouse or the letting of sports facilities.
VAT recovery is particularly problematic when clubs embark on capital projects such as the construction of new changing rooms and clubhouses or improvements and additions to pitches.
To help rugby clubs understand the rules and regulations surrounding VAT, the RFU has produced a guide to VAT.
VAT on Fuel and Power
Numerous clubs are being contacted by ‘Utility Consultants’ who are suggesting clubs are paying too much VAT on fuel and power costs. This is highly unlikely to be the case as the VAT rules for reducing the VAT rate charged are extremely restrictive and strictly only apply in certain circumstances.
The position is that unless the quantities of electricity, gas and oil are sufficiently low to be considered as domestic then no relief applies. Yes, some clubs may be a registered charity, but all clubs use the clubhouse premises, be it changing rooms only or including a bar area, for what are termed as ‘business’ purposes. This is primarily the sale of subscriptions to their members which is a business activity for VAT purposes. Accordingly, the charity relief does NOT apply.
This being so the only possible relief is where usage is extremely low and deemed to be at domestic use levels.
The maximum use which HMRC say constitutes domestic use, which does qualify, is as follows:
- Piped gas – not more than 4397 kilowatt hours per month
- Electricity – not more than 1,000 kilowatt hours per month
- Oil – A single supply of 2,300 litres of fuel oil
So, if your usage is under these levels then you can confirm that the supply should be at the reduced rate, otherwise it does not qualify and VAT is payable at 20 per cent. The HMRC has also produced guidance.
For any enquiries on this matter please contact our clubs’ VAT advisor Russell Moore on 07710 329317 or at russellmoore@sportsvat.co.uk
VAT Helpline
The RFU has engaged the services of Russell Moore, a former partner at leading sports advisory accountants Saffery Champness, to provide a VAT helpline service to clubs.
The first 30 minutes of advice is free to clubs with any additional services provided at greatly reduced rates.
Clubs can contact the helpline either by calling Russell on 07710 329317 or by emailing their enquiry to russellmoore@sportsvat.co.uk.
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