Proposed changes to affiliation fees to sports clubs

A sport’s governing body, or similar umbrella organisation, often charges an affiliation fee to individual clubs who make an onward charge to their members. Where the clubs are non-profit making, the supply of this affiliation fee to members is exempt from VAT.
However, if the club is a profit making commercial club, then the supply to their individual members is standard rated.  Essentially, HMRC currently provides a concession which looks to put profit making sports clubs in a similar position to non-profit making clubs, in that they do not need to account for VAT on fees charged.  It achieves this by allowing profit making commercial bodies to treat these recharges to their members as though they were disbursements.  
Why does it matter?

HMRC are looking to withdraw this concession by April 2018, however, commercial clubs can still benefit from this concession for another 15 months in the meantime.  We would suggest that all commercial sports clubs which pass on affiliate fees to their members should seek advice before the 2018 deadline to avoid a VAT cost on such fees to their members.

HMRC have also invited any comments on the potential impact of the withdrawal of the concession by 7 March 2017 to allow those affected to provide insight before HMRC publish their findings.

Please speak to your usual Buzzacott contact if you have any questions, or contact Thomas Mobee on 020 7556 1320.
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