British Sport Subject to ‘Invisible Tax’
It has been revealed that most British community sport is subject to 20pc tax, after an effort against HMRC was stepped up over their plans to levy VAT on 5-a-side football.
Although it is possible for some organisations to avoid tax, it is believed that many of us who use gym’s or send children to after school sports classes, pay tax that is never apparent to us. Tom Kivlehan, VAT expert at accountants BDO explains: “This is an invisible tax. People don’t notice it – they just think things are outrageously expensive”
The ruling mostly revolves around how an organisation is set up. If it is run for profit then it will be subject to normal UK tax laws, however if it is classed as not for profit, or run by an individual not representing a company, then it is possible to avoid paying VAT. Also, after school classes which are directly run by the school are tax-exempt.
In the case of 5-a-side football, the argument over tax stems from what the companies running the football are providing. Currently no VAT is paid, as providers claim they are simply providing the land for the football to be played on, in a manner that is VAT exempt. However HMRC has challenged this, adding that it is not the land that they are providing, but the sporting participation. In this case it would be subject to VAT.
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