VAT: Hidden depths of University rowing

Supplies of sport related activities to individuals can, potentially, be treated as exempt from VAT purposes. Where the supplies are made via a club, are those supplies made to the club or the individual club members?

Facts

Cambridge University Boathouse Limited (CUBL) owned a boathouse and leased it to several Cambridge University rowing clubs (the clubs), each of which was a company limited by guarantee. These clubs were responsible for putting forward rowers for the annual boatraces against Oxford University.

VATA 1994 Sch 9 Group 10 Item 3 exempts services made by eligible bodies to individuals where the supply is closely related to sport or physical education and the individual takes part.

The issue

CUBL had previously treated their supplies to the clubs as standard rated and reclaimed the related VAT, including £575,000 incurred on the building of the boathouse. However, in October 2018 HMRC refused several VAT repayment claims, it then raised assessments, on the basis that VATA 1994 Sch 9 exempted the supplies.

HMRC and CUBL both agreed CUBL was an eligible body and the supply was closely related to sport. They also agreed that the supplies were made to the clubs, not the individuals.

HMRC cited a Court of Justice of the European Union (CJEU) case: Canterbury Hockey Club v HMRC, which had determined that VATA 1994 Sch 9 could still apply for supplies to corporate bodies, where the true beneficiaries of the supply were the individuals taking part.

Who were the ‘true beneficiaries’ in this case, the clubs or the rowers themselves? The first tier tribunal (FTT) was asked to decide (TC08304).