VAT Treatment of Sports Facilities by Local Councils


Following the recent CJEU decision in London Borough of Ealing, HMRC has revised their policy on the exemption of sporting services supplied by local authorities.

Calculating VAT

The CJEU concluded that the UK was incorrect to exclude local authorities from the exemption for the provision of sporting facilities on the grounds that it would have provided them with an unfair advantage over commercial enterprises. Furthermore, the court decided that any restriction on the grounds of a distortion of competition had to be applied to both private non-profit organisations and public bodies. This is because EU law prevents the exemption from applying to one and not the other.

Following this judgement, local councils can opt to exempt the supply of services closely linked to sporting or physical education. Alternatively, councils can continue to charge VAT on these services to ensure input tax can continue to be recovered and prevent the need for a partial exemption calculation or change in said calculation.

HMRC state that local authorities are entitled to recover any net over-declarations they have made as a result of the supplies being considered taxable rather than exempt as long as they treat the supplies consistently (either exempt or standard rated in subsequent periods) and there is satisfactory evidence for the amounts claimed.

If you have any questions about this decision and wish to discuss your VAT position, please contact our Director of VAT, Alison Birch




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