Cambridge University Boathouse FTT decision

This First Tier Tribunal decision has been released in the Cambridge University Boathouse Ltd (CUBL) (case (TC) 08304).   A link to the case can be found here.

CUBL  sought to apply VAT to its supplies, thus enabling VAT recovery on the construction costs of a boathouse – the VAT at stake was £575k.  The Tribunal ruled that supplies were made to three elite rowing clubs, whose primary purpose was to win the Cambridge/Oxford boat race), rather than individuals, thus the supplies were taxable.

The legislation

The issue before the Tribunal was whether the supply of the Boathouse came within the
sporting exemption in the Value Added Tax Act 1994 (“VATA”), Schedule 9, Group 10, Item 3, which reads:

“The supply by an eligible body to an individual of services closely linked
with and essential to sport or physical education in which the individual is
taking part.”

Summary of the decision

The Tribunal decided that the Clubs (not the individual rowers) were the true beneficiaries, because they have the right to use the Boathouse for their training programmes and the right to store their equipment, and they pay for those rights. In contrast, the rowers (being the “individuals”):

1. had no right to access or use the Boathouse other than at the invitation of the
   Clubs and at the direction of the Clubs’ employees;
2. did not pay, either in money or in kind, for the usage of the Boathouse; and
3. had no right to store their own equipment in the Boathouse. 

Does this case jeopardise the exemption of other supplies to individuals when made “through” an amateur club?  

Paragraphs 110-112 of the decision appears to differentiate this case:

110. An important part of Mr Simpson’s case was that the position of CUBL, the Clubs and the rowers could not be distinguished from that of other membership clubs. He submitted that if Ms Belgrano’s submissions were correct, many clubs would lose their VAT exemption, and this would run counter to its purpose of encouraging sport and physical education. He said that many clubs, like the Clubs in this appeal:

(1) have an identity which continues beyond the current active participants;

(2) select teams and reject others who would like to play; and

(3) own the major items of equipment and the rights to carry out the sport in a particular location. For instance, rowing clubs typically own the boats, and football clubs license the pitch and provide the goal posts, corner posts, nets and balls.

111. Ms Belgrano said this misrepresented the position. The issue in this case was that none of the rights to use the Boathouse were passed to the rowers, whereas inmost clubs the members had rights of access and usage.
112. It is not for this Tribunal to decide the position of hypothetical supplies made to hypothetical clubs: the position will depend on the facts of each particular case. However, we can see significant differences between the position of CUBL and the Clubs on the one hand, and that of most membership clubs on the other. Even though (a) a club may have a reputation or identity which continues over time; (b) may own the equipment used by the members, and (c) the club’s coaches may select teams, it would nevertheless be rare for the members to be prevented from using the facilities other than under the explicit direction and control of the club’s employees.

If you have any questions or observations, please contact Andrea.