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VAT on children’s holiday clubs clarified

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The government has announced that it will provide additional funding to local authorities to coordinate holiday clubs for children in 2021, but what is the VAT treatment of these clubs?

11th Jun 2021
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Following a recent first tier tribunal case HMRC has clarified its stance on the VAT treatment of children’s holiday camps.

RSR Sports Limited (TC07453) ran holiday camps for children over the school holidays. RSR initially treated these services as standard rated for VAT, but later decided that they were in fact exempt welfare services under VATA1994 Schedule 9 Group 7 Item 9. RSR therefore claimed a refund of the VAT charged.

HMRC refused the refund on the basis the holiday camps did not qualify as welfare. RSR requested a statutory review, but this found in favour of HMRC. Undeterred, RSR took their case to the FTT.

The exemption

Item 9 of Group 7 VATA 1994 requires that to qualify for exemption, two conditions must be met.

The first, relating to the type of entity, was unquestionably met due to RSR being an Ofsted regulated business (Item 9(b)). The second condition required the supply to be of ‘welfare services and connected goods’. This was the main point of disagreement in the case: could the activities of RSR be considered as ‘welfare services’?

The legislation provides clarity as to what it considers welfare services. Of the definitions given, only one could apply to the services of RSR, namely the care or protection of children and young persons.

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