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Vat on unclaimed season ticket refunds

VAT RE FOOTBALL CLUBS

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I help out on a voluntary basis with a professional football club in Scotland.

Due to the season being cut short clubs are now starting to offer their season ticket holders refunds for the 2019/20 season for games that are not going to be played.

They appear to be missing an opportunity whereby if the season ticket holder decides to not take the refund to help support the club (as many are not) then it is my view that the unpaid refund now converts to a donation and not a vatable sale to the club.  This therefore should allow the club to reclaim the vat that it has already paid at the start of the season when it treated the income as a sale. 

This potential refund runs into many thousands of pounds for some clubs.

I would be interested if others who are more vat experienced agree with me and if the clubs should being do more than simply saying on its website that any refunds not taken up will be treated as a donation.

I presume the same situation is happening all over the UK as many leagues have cut their season short.

 

Replies (26)

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By Tim Vane
24th May 2020 00:16

I assume that HMRC will be releasing guidance on this in due course, just as they did for gift aid on donated tickets.

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By Wanderer
24th May 2020 06:31

brash wrote:

....then it is my view that the unpaid refund now converts to a donation and not a vatable sale to the club.  This therefore should allow the club to reclaim the vat that it has already paid at the start of the season when it treated the income as a sale. 

You are just making stuff up to suit you situation.
It's still charged to VAT, changed a couple of years ago.
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Replying to Wanderer:
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By Ben McLintock
24th May 2020 09:38

Is it not the rules on forfeited deposits that have changed? I'd have thought it's a different situation here, as the seller has had to cancel?

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Replying to Ben McLintock:
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By Wanderer
24th May 2020 09:47

Yes and I've referred the OP to that below, also offering the very point you make. How often though if the seller cancels will they keep the fee? It may be that an argument can be made and the rules you refer to and the case law behind them will give a good research start point for the OP to apply to their situation with all the extra information that they will have.

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Replying to Wanderer:
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By Ben McLintock
24th May 2020 09:52

It may be better just to issue the refund for the tickets and reclaim the VAT. Donations could be sought from supporters entirely separately...

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Replying to Ben McLintock:
RLI
By lionofludesch
24th May 2020 10:49

Ben McLintock wrote:

Is it not the rules on forfeited deposits that have changed? I'd have thought it's a different situation here, as the seller has had to cancel?

These aren't forfeited deposits. These are refunds which have been voluntarily waived.

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By brash
24th May 2020 09:06

When you say it changed a couple of years ago can you elaborate.
Whilst it is not literally the case my point is that if the club physically gave the money back to the season ticket holder and they then gave it back to the club is this not a donation? It can’t be a sale as they are getting nothing in return.
Charity volunteers can choose to donate their expenses to the charity. Does money have to change hands then?
The club have recognised in writing that the supporter had been overcharge.
How can the overpayment be a sale?
To suggest I am trying it on when there organisations all over the country on the verge of going out of business.

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Replying to brash:
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By Wanderer
24th May 2020 09:41

brash wrote:
When you say it changed a couple of years ago can you elaborate.
Change was 1 March 2019 following a December 2018 brief.
brash wrote:
Whilst it is not literally the case my point is that if the club physically gave the money back to the season ticket holder and they then gave it back to the club is this not a donation?
Possibly, but that's not the case in point is it?
brash wrote:
It can’t be a sale as they are getting nothing in return.
Look up the rules on deposits / payments in advance then goods / services not delivered.
brash wrote:
Charity volunteers can choose to donate their expenses to the charity. Does money have to change hands then?
What's that got to do with the price of fish?
brash wrote:
The club have recognised in writing that the supporter had been overcharge.
New fact you've just introduced.
brash wrote:
How can the overpayment be a sale?
It's not an over payment, it was the proper payment for the service to be delivered.
brash wrote:
To suggest I am trying it on when there organisations all over the country on the verge of going out of business.
Who made that suggestion? You are making stuff up again.

Look, there may be something in the legislation and guidance which may help you however I'm not going to do your research when you are basing it on some random thoughts and views that you have without bothering to properly research yourself. Much also will also depend on the T's & C's which hopefully you've read however haven't shared with us.

Trying to help you here one difference in your case to the guidance is that the supplier has failed to deliver rather than the customer has not used but you need to read and apply it to your exact circumstances, T's & C's and what has happened in the new fact you've introduced.

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By brash
24th May 2020 10:43

It is a clear fact that the supplier failed to deliver and as a consequence has offered the purchaser a cash refund (not a credit note) on the part it failed to deliver. I said this in my initial post.

If every supporter took the refund and then separately gave a payment for the same amount to the club for nothing in exchange this in my opinion would be a donation and not subject to Vat.

I mention the charity example because this is a casing point where money has not changed hands and HMRC recognise it as two transaction. The charity can claim gift aid.

This situation will apply to hundreds of financially strapped clubs in many sports. My own club would receive over £12k back.

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Replying to brash:
RLI
By lionofludesch
24th May 2020 10:55

brash wrote:

It is a clear fact that the supplier failed to deliver and as a consequence has offered the purchaser a cash refund (not a credit note) on the part it failed to deliver. I said this in my initial post.

If every supporter took the refund and then separately gave a payment for the same amount to the club for nothing in exchange this in my opinion would be a donation and not subject to Vat.

I mention the charity example because this is a casing point where money has not changed hands and HMRC recognise it as two transaction. The charity can claim gift aid.

This situation will apply to hundreds of financially strapped clubs in many sports. My own club would receive over £12k back.

What do the SFA say ? They need to be taking this up with HMRC as your trade association.

What proportion of season ticket holders have waived their right to a refund ?

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Replying to lionofludesch:
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By brash
24th May 2020 11:14

The SFA are pretty inactive when it come to taking responsibility in matters like this. They will refer the clubs to their own advisers which I have already done in a couple of cases.

The inital results (Partick Thistle) indicate that the take up of refunds is minimal which makes it all the more inportant to resolve this as there is are significant numbers at stake. Supporters know their club is in trouble are want to help.

It would be helpful to get a clear ruling as the issue is only getting bigger.
You have many fans buying season tickets for 20/21 knowing their club needs the money and yet also knowing they may not see a ball kicked until 2021.

This is not some scam to get one over HMRC. The fans are giving their money to the clubs for absolutely nothing in return. There is no supply/tax date.

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Replying to brash:
RLI
By lionofludesch
24th May 2020 11:35

brash wrote:

The inital results (Partick Thistle) indicate that the take up of refunds is minimal which makes it all the more inportant to resolve this as there is are significant numbers at stake. Supporters know their club is in trouble are want to help.

Ah - Partick Thistle. I've been to Firhill a couple of times to watch Scotland play Ireland and Wales. That'd be back in the 1990s.

If the SFA won't help, try other countries' FAs. Or other sports for that matter. The more of you get together, the greater the chance of success.

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Replying to brash:
RLI
By lionofludesch
24th May 2020 11:25

The problem here is that this is a situation which has not been contemplated. Customer is entitled to refund but donates it to the supplier is not one which I've encountered before. Coupled with that, it's likely that these sales are retail, which leads to a lack of an audit trail.

As I read it, the legislation doesn't cover it specifically, it merely refers to deposits which are retained by some contractual right, which is not the case here. There are no similar examples in the blurb on the HMRC website. Your case will be strengthened if it can be shown that some season ticket holders did accept the refund. It will be weakened if you offer season ticket holders a cheap ticket for 2020/21 - or whenever the next season might be.

I think you have an arguable case but winning is not guaranteed. A test case might be needed.

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Replying to lionofludesch:
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By Ben McLintock
24th May 2020 11:35

Perhaps correspondence from each customer confirming that they would like their refund to be treated as a donation would strengthen the case, as it makes clear they have understood their right to a refund and have waived it.

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Replying to Ben McLintock:
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By brash
24th May 2020 11:50

There are definitely examples where fans have taken up the refund. In Particks case the refund was around £4k out of £80k. They would benefit to the tune of £12k.

It would be a challenge to get every season ticket holder to put something in writing as some clubs have many thousands of season ticket holders. Having said this I expect their email addresses will be on the club's database.

I appreciate all the comments and I am going to continue to take this forward with the SFA and SPFL bodies. As I have said there is a huge amount of money at stake in a sector that is on the verge of bankrupcy.

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Replying to brash:
RLI
By lionofludesch
24th May 2020 12:12

brash wrote:

There are definitely examples where fans have taken up the refund. In Particks case the refund was around £4k out of £80k. They would benefit to the tune of £12k.

It would be a challenge to get every season ticket holder to put something in writing as some clubs have many thousands of season ticket holders. Having said this I expect their email addresses will be on the club's database.

I appreciate all the comments and I am going to continue to take this forward with the SFA and SPFL bodies. As I have said there is a huge amount of money at stake in a sector that is on the verge of bankrupcy.

Point the Chancellor in the direction of his predecessors' annual waiving of VAT on Simon Cowell's X-Factor Christmas releases. I've no idea why he's singled out for favourable treatment.

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Replying to brash:
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By Ben McLintock
24th May 2020 12:57

brash wrote:

It would be a challenge to get every season ticket holder to put something in writing as some clubs have many thousands of season ticket holders. Having said this I expect their email addresses will be on the club's database.

I appreciate that it's a faft, but without such an indication of intent from the customer, HMRC would likely argue that the payment was never made as a donation and it simply remains consideration for what has already been supplied.

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Replying to Ben McLintock:
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By lionofludesch
24th May 2020 13:30

Ben McLintock wrote:

I appreciate that it's a faft, but without such an indication of intent from the customer, HMRC would likely argue that the payment was never made as a donation and it simply remains consideration for what has already been supplied.

How much is the VAT per season ticket holder ?

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Replying to lionofludesch:
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By NIGEL SCOTT
27th May 2020 10:32

lionofludesch wrote:

Ben McLintock wrote:

I appreciate that it's a faft, but without such an indication of intent from the customer, HMRC would likely argue that the payment was never made as a donation and it simply remains consideration for what has already been supplied.

How much is the VAT per season ticket holder ?

My season ticket in Swindon cost about 400 - there are 4 matches unplayed so that's about £70 refundable - I believe we have around 5000 STH so that's around £350k so the VAT is just shy of 60K, a big sum for a small club

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Replying to brash:
Hallerud at Easter
By DJKL
24th May 2020 13:10

I have been encouraging my three to take the balances from their Hibs season tickets and then, if they wish to support Hibs, donate the same sum to them at a later date.

Interestingly Hibs are offering "unique fan experiences" (Does that mean their defence will not scare their supporters at some time during a game) for those that do not apply for refunds which is interesting re this debate as it slightly raises the idea of consideration for not taking the refund.

To be clear I had not considered the vat angle but had more worked on the basis that it is always better to have control of the cash rather than leave it in the control of others, the money can later be donated if it proves necessary for Hibs survival (which I have a strong suspicion it might well be) but this allows my wife and children to defer any donation until there is more clarity.

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Replying to brash:
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By WhichTyler
28th May 2020 20:48

brash wrote:

I mention the charity example because this is a casing point where money has not changed hands and HMRC recognise it as two transaction. The charity can claim gift aid.

>

Not True. Money has to change hands twice (charity>volunteer>charity) for GA to apply. See https://www.gov.uk/guidance/gift-aid-what-donations-charities-and-cascs-...

"Once you pay a volunteer, they can keep the money or pay part or all of it back to the charity as a Gift Aid payment.

Gift Aid only applies when the volunteer makes an actual payment of money to your charity or CASC. You cannot claim Gift Aid if a volunteer decides not to claim for expenses that they’re entitled to."

And I think you mean 'case in point'...

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By keith_j
27th May 2020 10:28

I am a season ticket holder of a league two club in England. The clubs have voted to end the season early and the club has contacted me giving me 3 options:
1. A cash refund, which I calculate to be about £55
2. To receive a credit to be used against next season's ticket.
3. to donate the overpayment to the club.

Despite me being a tight accountant I have taken option 3. Not clear if they have considered the VAT angle but from the comments above I presume the club can reclaim £9 from HMRC?

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Replying to keith_j:
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By lionofludesch
27th May 2020 10:36

keith_j wrote:

I am a season ticket holder of a league two club in England. The clubs have voted to end the season early and the club has contacted me giving me 3 options:
1. A cash refund, which I calculate to be about £55
2. To receive a credit to be used against next season's ticket.
3. to donate the overpayment to the club.

Despite me being a tight accountant I have taken option 3. Not clear if they have considered the VAT angle but from the comments above I presume the club can reclaim £9 from HMRC?

That's my thought - in round numbers.

Perhaps you'd like to tell brash which club that might be.

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By Brend201
28th May 2020 17:52

I don't have knowledge of the rules on any of this - but I like the way you think.

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By brash
28th May 2020 19:04

I started the post.
I have received an email from a scottish premier league club who having taken my advice spoke to their auditors who in turn spoke to HMRC who confirmed that they COULD reclaim the vat.
Personally I am not surprised but I must stress this is only an email from a representative at the club. I would urge anyone else who wants to pursue this to follow the same procedure.

If you take this across all the leagues and sports that sell season tickets there are hundreds of thousands of pounds that could be returned to the much needed clubs.
My limited research suggests that many fans do not take up the refund option because they want to help their clubs hence the reason to push this even more.

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Replying to brash:
RLI
By lionofludesch
28th May 2020 20:12

I would refer you to keith j's post on 27th May at 10.27, which seems a good way of going about it.

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