The forgotten sector...The sporting world

27 April 2021

There’s a certain optimism and excitement to the air as restrictions begin to ease over the next few weeks. Many of us look forward to meeting friends for a pint at our local pub (outside), watching the football or the cricket. Whilst we all agree that hospitality venues desperately need help to reopen and recover, what help’s being given to the many sporting venues and clubs up and down the country?

When the emergency VAT reduction measures were introduced last year, it was a welcomed sight. There was a flaw to this for many however, because it didn’t include the Sports sector. Entrance to sports events and sporting activities is excluded from the temporary 5% VAT rate. What’s even more confusing about it is a trip to an amusement park to play crazy golf qualifies for 5% VAT, but not a round at your local golf club. You can enjoy a track day, but you mustn’t be taking part in a race. Why’s that? It’s odd isn’t it that the dividing line between 5% and 20% VAT could simply be down to whether the authorities decide an activity’s ‘competitive’. That’s surely a very arbitrary way to determine taxing policy and what does it say about how sport’s viewed by policy makers? It’s a challenge to see the just reasoning here.

There’s always been a certain reluctance by the authorities to recognize sport as deserving or, perhaps, a culturally valuable activity. However, anyone who lives in a community knows that the local cricket club, football ground or sports center is a lifeline and often, the very focus that brings people from all walks of life together. Whether it’s after school clubs, developing the younger generation, or a place for everyone to congregate and enjoy some friendly competition, these places are important. So, how can we re-ignite business, and ensure the success to sports?

There’s a range of VAT and Tax reliefs you may be able to access, so there’s value in having a discussion with me or one of our Sports & Entertainment team about your sport or events business. Here’s a few examples of the tax and VAT reliefs that could apply…

  • VAT zero-rating relief on the construction of a village hall or similar building(s) used for social or recreational purposes, including sport;
  • VAT zero-rating relief on the construction of new buildings for charities, which includes buildings that may be used for sport; and
  • VAT zero-rating relief on the construction of annexes to existing buildings for charities, which includes buildings that may be used for sport.
  • Although not available for sport, a 5% reduced rate relief currently applies to catering from restaurant, cafés, etc, but excludes sales of alcohol;
  • Relief for investment into qualifying activities through EIS, Seed-EIS  and Social Investment Tax Relief to help fund sporting activities;
  • Corporation Tax relief for contributions to grassroot sports.

It goes without saying that many of these reliefs are interpreted very strictly by HMRC and it’s important to take advice before embarking on a major development project, which is so strongly reliant on a relief applying.

As a firm, we’re proud to identify with, and work closely with the sporting sector and businesses involved within this space. We’re here to help both large and small companies get safely back on their feet, and hit the ground running. So, whether you need advice on how best to access government support and optimize your VAT/tax affairs, get in touch with us. And, lets all look forward with hope to a great summer of sport.