UK Legislation on Sporting Services found to be in Breach of EU Law
This morning the Court of Justice delivered its Judgment in London Borough of Ealing v HMRC (Case C-633/15) in which the Court decided that the exclusion from the sporting exemption for which Note 3 to Group 10 of Schedule 9 provides is in breach of Directive 2006/112/EC.
This Judgment means that those public bodies who submitted repayment claims for output tax overpaid in respect of the supply of sporting services can expect to have those claims paid but those who wish to rely upon the treatment for which the domestic legislation provides can continue to do so until such time as the VAT Act is amended to remove the exclusion.
A copy of the Judgment can be accessed here.
On 15 December 2016 the First-tier Tribunal in Belfast directed that the appeal in Magherafelt District Council v HMRC TC/2011/00687 be stayed until 28 days after the release of the judgment in Ealing. The District Council claims that its supplies of sports, leisure and recreational services fall outside the scope of VAT on the basis that the making of those supplies does not comprise an economic activity. It also contends that it makes the supplies as a public authority under Article 13(1) of the Principal VAT Directive. If successful, some local authorities will be better placed to claim an entitlement to recover part of the VAT costs they incur when providing sports, leisure and recreational facilities.