Teresa has urged Ministers at the Treasury to step in and help sporting clubs affected by recent clarification from Her Majesty’s Revenue and Customs (HMRC) on VAT charging for the letting of football pitches and sport facilities.
Teresa has been contacted by a number of concerned constituents who play 5-a-side football at their local Goals Soccer Centre. The cost of participating in the league is set to increase substantially after HMRC issued new guidance in February that all sports league payments will be liable for VAT at the current rate of 20%. Until now many teams have not been charged VAT under regulations which exempt block bookings of sports pitches. But a renewed interpretation of the regulations by HMRC will see VAT charged at 20% on pitch hire.
HMRC’s clarification means that many clubs will be charged VAT for the first time and player fees will likely rise by 20%. Teresa wrote to the Treasury to raise concerns about the impact this new cost will have on sporting participation in Erith and Thamesmead. The Minister denied a change of policy, saying that HMRC had always believed sporting payments were liable for VAT, but admitted the policy had not always been applied consistently. Teresa is now in talks with sporting bodies such as the FA and Labour’s Shadow Minster for Sport Gerry Sutcliffe about taking the campaign further.
“It is shocking that with less than a year to go to London 2012 we are seeing new taxes on grassroots sports like local five-a-side football leagues. The London Olympic legacy programmes are trying to encourage more people to get active but they will be cancelled out if people in existing sporting leagues can no longer afford to play.
“A 20% price rise will be a big deterrent in the current economic climate but sadly the Government isn’t doing anything to help the clubs whose players will have to pay VAT for the first time. The Government could still take action by choosing to allow a reduced rate for the use of sporting facilities under the European Directive on VAT. For instance, in Luxembourg the equivalent tax charge for sport is 2% instead of 15% and in Sweden 6% instead 25%.
“I will continue to put pressure on the Government to take a similar approach so we don’t see a decline in participation in local sport.”