HM Revenue & Customs (HMRC) have issued Business Brief 08/14 accepting a change in their policy following their defeat in the First Tier Tribunal case of Goals Soccer Centres Plc (GSC).
GSC owned and operated a chain of five-a-side soccer centres incorporating artificial pitches with floodlights and high quality amenities. Their core business was pitch hire and at the Tribunal hearing it was accepted that the hire of pitches on their own was a VAT exempt supply when the conditions within the VAT Act Schedule 9 Group 1 were met. The issue at stake was the VAT treatment of GSC’s supply of small sided football leagues in which GSC provided a pitch and the management of a football league competition to the participating teams. There was no dispute that the management of the competition was a taxable supply at the standard rate. GSC however argued that the pitch hire was a separate supply under a separate contract and not so closely linked with the league management contract as to be artificially split. Therefore their supplies constituted multiple supplies each having its own identity and VAT treatment. HMRC contended that there was a single supply of participation in a football competition liable to VAT at the standard rate. Importantly The Tribunal concluded it would be artificial to combine them as a single supply.
HMRC now accept that, provided the conditions are met, the pitch hire can be exempt from VAT but the management services are standard rated. If there is a single price then businesses must apportion the values. This decision reinforces the key VAT principles established on the CPP case on the complex area of VAT on single and multiple supplies. Businesses which have over declared VAT on pitch hire in similar circumstances may be eligible for a VAT refund.
For more information and advice please contact Malcolm Nichols on 01962 735350