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Apportionment of membership subscription

21st Sep 2021
VAT Consultant
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The question of membership subscriptions can be a tricky one. The first misunderstanding to address is that subscriptions are not necessarily exempt.

There is exemption for certain non-profit-making organisations within Exempt Group 9. HMRC Notice 701/5, chapters 11 and 12 explain these provisions. Unless the organisation can fall within one of these categories, its subscription reverts to the standard rate.

There is also an HMRC concession for non-profits, which allows the organisation to apportion its subscription. This begs the question whether the concession applies to a non-profit which falls outside Group 9.

 My view is that it can. And I’ll explain why.

First, the wording of the Concession (Notice 48, para 3.35) simply refers to ‘a membership body,’ not to ‘an organisation falling within Group 9.’

Second, in the FTT case of Shanklin Conservative and Unionist Club [2016] UKFTT 135, this precise question was put to the Judge. Now, we must be careful, as the FTT has no jurisdiction to determine  whether the concession can apply. Even so, the Judge took the opportunity to express a view. The analysis is at paras 103-111 of the decision.

The Tribunal commented that HMRC had tried to read the concession in light of the European PVD (art 132(1)(l)) which is irrational (para 104). The Tribunal also commented that HMRC’s concession ‘lacked precision’ (para 106), as it described a subscription as a mixture of supplies at different rates of VAT, even though a subscription is necessarily a single supply.

The Judge helpfully re-worded the concession to make it more sensible: ‘ ‘bodies that are non-profit making and would make a supply of a mixture of zero-rated, exempt and/or standard rated benefits to their members in return for their subscriptions were it not for the above rules on single supplies, may apportion such subscriptions to reflect the value and VAT liability of those individual benefits, without regard to whether there is one principal benefit.  …” (added words in italics)’

I think this analysis is valid, coming as it does from an experienced Tribunal Judge, and it provides the clarity lacking in the wording of the concession.

As I said, this has little legal authority. But, if you are trying to apportion a subscription then this provides a helpful starting point.

The Shanklin decision is here:


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