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 their individual members is exempt from VAT.

However, if the club is a profit-making commercial club, then the supply to their individual member is standard rated.

The original concession aimed to put profit-making commercial clubs in a similar position to non-profit making clubs, so that they did not need to account for output tax on the fee charged. It achieved this by allowing profit-making commercial clubs to treat these re-charges to their members as though they were disbursements.

However, as such re-charges of affiliation fees are not, in fact, legally classed as disbursements, the concession goes beyond HMRC’s discretion and is being withdrawn with effect from 1 April 2018, following a consultation on the issue at the beginning of last year.

This means that clubs need to make arrangements to charge VAT at the standard rate of 20% on these charges with effect from 1 April 2018, unless they meet the condition of a disbursement.

The withdrawal of the concession has no impact on the VAT treatment of affiliation fees by non-profit making sports governing bodies, or similar umbrella organisations, and on non-profit making sports clubs to their members.

In their case, the charge they make for affiliation fees will continue to be exempt under the law. If they are partly exempt for the purposes of calculating their recoverable input tax, such bodies should ensure that they continue to include affiliation fees in their exempt and total supplies in any appropriate partial exemption calculation.

Paragraphs 3.6.1 and 3.6.2 of VAT Notice 701/45 are being amended to reflect the changes as well as VAT manual VSPORT2020 – Affiliation Fees.

Revenue and Customs Brief 1 (2018): VAT - treatment of affiliation fees for sports clubs is here.

Report by Pat Sweet