The on-going saga of how new legislation will affect VAT on the trading affairs of sports clubs amd associations has finally been concluded.
“Customs and Excise have finally agreed that the new rules will cone into effect from 1st January 2000,” explains Itir Herzenstein, Head of Indirect Taxes at the London office of accountants Hacker Young. “This gives clubs and associations a few more months to benefit from a period of exempt trading. More importantly it gives them a period in which to re-write their constitutions in order to remain exempt from VAT after that date.”
The new rules mean that sports clubs must be non-profit making if they are to remain exempt from VAT. One implication of this is that those involved with the management or administration of the club must not receive any profit-related payment for their work as employees. Non-employee club members, trustees and officers must not receive profit-related payments either.
Another implication is that a club must not use any profits that are made for any purpose other than improving sporting facilities. “The good news is that Customs & Excise have made a specific exclusion for profits distributed to eligible bodies, such as charities,” continues Herzenstein, “and for profits distributed on winding up. The latter will be particularly welcomed by golf clubs as many will now be able to retain their exemption.
“By missing the original deadline, Customs & Excise have given people a few extra months in which to get their affairs in order. We have been inundated with calls from people who are unsure about how the new rules will affect them and what they should do. Those still unsure should call us on 0171 216 4600.”