The provision of shooting rights in the course or furtherance of business is a taxable supply for VAT purposes. This means that where the income received exceeds the current VAT registration limit of £83,000 in any period of twelve calendar months or less the shoot would need to have a VAT registration in place and charge VAT to those participating in the shooting activity.
This feature will also have an impact where a there is an existing VAT registration in place (e.g. a farm) and the shooting activity is carried out by the same legal entity. In this scenario, the shooting activity will automatically come within the existing VAT registration unless it can be seen that is operated on a non-commercial basis.
There are instances where HMRC accept that the provision of shooting rights is outside the scope of VAT on the basis that the activity is not operated on commercial lines. Where this can be proven there will be no VAT due on the income received but of course the counterpoint is that there will be no VAT recoverable on the associated costs that are liable to VAT. These instances are:
Shooting in hand
Under this arrangement, the landowner will control the private shoot and can accept contributions towards the costs from those taking part. The contributions received are held to be outside the scope of VAT where:
- The participation in the shoot is restricted to friends and relatives;
- The shoot is not advertised to the public;
- The accounts for the shoot show an annual loss at least equal to the usual contribution made by one participant over the year; and
- The loss is borne personally by the landowner.
Alternatively, syndicates can be set up under which individual members share the expense of shooting under an arrangement similar to the above. The issues here are that if the syndicate has other activities that take it over the VAT registration limit it must account for VAT on the charges made to the members. In addition, where the landowner is also a member, he will need to account for VAT on the full value of the grant of shooting rights over the land itself to the syndicate.
In some cases there is also scope for VAT exemption to apply by setting up an eligible non-profit- making body, to provide the shooting rights to those individuals participating in the shoot. The issues here are that the aims of the organisation must clearly be non-profit –making i.e.
- it is precluded from distribution of any profit it makes;
- it must apply any profit made to the continuation of its activities; and
- it is not subject to commercial influence.
This last feature is an important point to note as it effectively means that any parties connected to the shoot cannot extract profits by means of management services or the letting of land.
If the eligible body condition can be satisfied then the exemption applying to the sporting services is now extended to any individual participants rather than just those who are members of the of the non-profit-making sports club. This has been brought about by the ECJ decision in respect of the Bridport and West Dorset Golf Club and took effect from 1 December 2015.
HMRC still tend to look at shooting arrangements very closely. The interest is not limited to those arrangements where VAT is not charged but also to situations where the activity has been set up purportedly on commercial lines to secure VAT recovery on the associated costs. The clear advice in this area is that the arrangements should be kept under review to ensure that the income from shooting receipts is treated correctly and that where appropriate the correct amount of VAT is claimed.
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