Shooting Clubs and VAT
04 September 2008
The recent case of British Association for Shooting and Conservation Limited (BASC) v Commissioners for HMRC shows the importance of correctly identifying and documenting a shooting club's objects if VAT exemption is to be obtained in respect of membership subscriptions.
Many shooting clubs seek to obtain the benefit of VAT exemption on subscription charges made to members. This exemption is normally claimed on one or more of the two following grounds. Firstly, the club has objects which are of a political, philanthropic or civic nature; and/or secondly the subscription fees are for services closely linked with and essential to sport in which the individual member is taking part.
Political, philanthropic or civic nature
BASC's primary purpose was to act as a representative body for those engaged in sporting shooting. The Tribunal accepted that conservation was one of BASC's major activities. However, the tribunal found that BASC is an organisation whose primary purpose is the protection and advancement of its member's interests. Its political, philanthropic and civic duties were no doubt of benefit to the wider community but were nonetheless secondary to its primary purpose of advancing its members interests.
The Tribunal paid particular attention to the way the objects of the organisation were recorded in its constitutional documents as well as taking detailed evidence from the Chief Executive of BASC. The Tribunal made clear that it was the primary object of the organisation which would be determinative in deciding whether the exemption applied; simply having a required object as a subordinate purpose was insufficient. The decision leaves open the possibility that shooting clubs may be able to qualify for exemption on these grounds although in practice it may well be difficult to convince a Tribunal that the primary object of the club is not to further the interests of its members; with any political, philanthropic or civic object being merely ancillary to and in support of that primary object.
Closely linked with and essential to sport
The case is more encouraging in respect of this exemption. On the facts, it was found that BASC did not qualify which is perhaps not surprising considering that rather than being a sporting club BASC is a representative body whose members comprise both individuals and shooting clubs. It does not itself supply any facilities to enable members to shoot and on that basis it was found that the link between the activities of BASC and sport was not sufficiently close.
However, the Tribunal agreed that shooting was in essence capable of being a sporting activity. The case indicates that activities that will be suitably linked to sport include provision of land on which to shoot, the game to shoot and the guns with which to shoot. Interestingly, the decision casts doubt on the requirement in UK legislation that the services supplied must be "essential to sport". This requirement may be contrary to European Law.
The provision of exempt supplies by shooting clubs is an area which HMRC are actively targeting. It is not possible to prevent such a challenge however with careful planning and in particular carefully worded objects which accurately reflect the true purpose of the club it is possible to enhance the chances of avoiding such a challenge or of successfully defending it if it happens.