Throughout the pandemic sports clubs have been unable to hold games with crowds in attendance meaning many season ticket holders have not been able to receive the services they paid for when the season commenced.
We were asked the question ‘can a sport club class the income as a donation with no VAT rather than a sale due to the fans not being able to attend games?’.
Firstly, you would need to apportion the income over the number of games fans were able to attend as they have received goods/services in respect of their season ticket.
For example, if there are 20 home games per season, 5 held before lock down and available for attendance then a quarter of the income is subject to VAT. The remaining three quarters has the potential to be classed a donation subject to certain criteria being met.
The club would need to give the fans the option of being refunded for their season ticket in respect of the games they were unable to attend.
If the customer has the choice and they explicitly say they are happy to donate their refund to the club, this can be treated as a donation and the income exempt from VAT.
If the customer has a choice and they want a refund, this is treated as a refund of season ticket and VAT accounted for.
If the customer doesn’t respond, the refund cannot be treated as a donation as they have not freely and without restrictions given this money to the club.
As a result of COVID-19 the government introduced a number of measures to assist businesses in the hospitality industry and temporarily reduced VAT to 5% to certain supplies made between 15 July 2020 to 12 January 2021.
Sports clubs can take advantage of the reduction in VAT if they supply food and non-alcoholic beverages for consumption on your premises.
If you are unsure whether this is applicable for your club or would like to discuss this in further detail, please call the office on 01482 427360 and a member of the team would be happy to assist.