Five-a-side football league organiser Netbusters has won a case at the Upper Tribunal over whether or not payment of £633,146 in VAT was due for pitch-letting.
The case concentrated on a dispute wherein the appellant Netbusters argued that HMRC’s demands for VAT had been over declared for the durations 04/13 – 10/16 within side the overall sum of £414,622; and rejected a second evaluation that the organisation owned VAT for the durations 01/17 – 07/18, totalling £218,542.
Following a choice against HMRC in the First Tier Tribunal, the tax authority appealed the decision at the Upper Tribunal, arguing that VAT was payable on the pitch lease.
Netbusters organises competitive five-a-side football and netball leagues. It hires pitches from third parties (such as schools and nearby authorities) as a regular collection of block bookings. It then makes those pitches to be had to the groups who have signed up to the league to allow them to play their league fixtures.
The organisation manages all elements of league administration. Typically, a group can play one match per week on the same evening every week, and every booking will be long enough to allow two or more matches to be played one after the other. On the larger pitches, two matches might be played at any one time.
At the original tribunal hearing, the FTT ruled that the services supplied by Netbusters had been one ‘single composite supply’, which intended the supplies have been exempt from VAT, pointing out that the objective character of the supplies made through Netbusters was within the domain of being a grant of a purpose within, or on a territory, having a licence to inhabit land. This thereby, was in compliance with Schedule 9, Group 1 from the Value Added Tax Act of 1994.
At the hearing, HMRC argued that the FTT must have concluded that the economic truth of Netbusters’ supplies was not the grant of a licence to inhabit land via the hiring out of sports pitches but, rather, was offering competitive league sports management services.
The value to each team getting into a league is between £350 to £779 per season of around ten matches. There is a uniform price to pay for both pitch lease and league management services. The letter gives 87.5% of the fee to pitch hire. To league management services, the remainder 12.5%.
The tribunal cited that the standard rule is that supplies of land are exempt from VAT. This is due to Article 135 of the Principal VAT Directive, which calls for member states to be exempt from the scope of VAT transactions which come in the definition of ‘the leasing or letting of immobile property.'
The Upper Tribunal Verdict
The Upper Tribunal disregarded HMRC’s appeal, pointing out that ‘the FTT implemented the proper assessments in regulation and became entitled to attain the realisation it did on the proof available to it, regardless of whether or not they might have come to the similar conclusion.
