Easier to qualify for the ‘sporting exemption’ from VAT

In recent times some shoots have been unexpectedly caught by HMRC where they have failed to charge their “members” VAT. This has come as a very nasty surprise and often makes an already unprofitable exercise in to something which is totally unaffordable.

VAT is charged on a “taxable supply”, and in this context, the right to shoot and take game, as well as making land available for shooting are considered taxable supplies. This latter point is important to understand from the landowner’s perspective, in that even if a landowner has not “opted to tax” his land and therefore does not have to charge VAT on rent, he will still have to charge VAT on the shooting rights leased to the shoot if the landowner is VAT registered.

VAT registration only becomes compulsory when the taxable turnover of a business, which may include a shoot, exceeds £81,000. Clearly this will only be relevant to larger enterprises but it is surprising how much running a shoot can cost. Up until 1st January this year, any shoot with a turnover in excess of the threshold which charged fees would need to register for VAT, unless it fell within a narrow exemption.

The exemption applies to supplies made by an ‘eligible body’ of sport-related services, but only where supplies are made to members of that eligible body. A shoot can fulfil the requirements of being an eligible body, provided it is non-profit making, and not subject to commercial influence.  

In this respect a syndicate whose members simply share the cost of running the shoot should fall within the exemption, but the water becomes muddy where the syndicate lets one or two days to guns who are not members of the shoot. This is common practice where the syndicate is looking to increase its income so as to reduce the cost of running the shoot, but the benefits of doing so will backfire if as a result the members have to be charged VAT on their membership fee at the rate of 20%.

If a shoot is being run on a commercial basis, letting days to corporate clients for example, charging VAT is understandable but it seems harsh that members of a syndicate of individuals, who are simply trying to cover the costs of their shooting activities, may also have to pay VAT.

However, from the 1st January it seems the rules have been simplified so as to make it easier to qualify for the ‘sporting exemption’ from VAT which now applies to all VAT-able supplies made by eligible bodies that enable participation in a sport, whether supplies are made to members or non members.

Having said that VAT is a complicated area of tax, particularly for Landed Estates where opting to tax land and the resultant partial exemption rules require careful consideration but at least in the context of a shooting syndicate, matters appear to have become a little more straightforward.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk