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Payment point
Unlimited access to all leisure facilities in a leisure centre, typically in return for a monthly or annual payment, is liable to VAT at the standard rate. The Court of Session confirmed HMRC's policy that an all-inclusive scheme is a single supply of the right to use the facilities. The fee paid cannot be apportioned between supplies merely because one or more of them would be at a different VAT rate if charged for separately.
The VAT liability depends on the nature of the supply, which has to be decided when the all-inclusive fee is paid. At that time, there is only one supply; there is no basis for identifying separate ones because the leisure centre cannot know which the subscriber will use and how often.
In The Highland Council v CRC, the Court of Session said that 'the transaction … is properly characterised as the provision of a contractual right to use the appellants' facilities, for a fixed period, as described in the application form, at the point of payment'. Therefore, where other councils or leisure trusts are operating schemes similar to those made by The Highland Council, these are to be treated as a single standard-rated supply.
However, HMRC accept that, where a scheme offers facilities or activities that would all, if supplied individually, be exempt, the supply of the package is also exempt. This is because the liability can be pre-determined at the time of supply. Membership schemes are not affected. Thus there is no impact on the extra-statutory concession for apportioning membership subscriptions to sports clubs run by non-profit making bodies.
HMRC Brief 50/07, 13 July 2007
