Revenue and Customs Brief 18 (2020) VAT liability of school holiday clubs First-tier Tribunal
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Published 17 November 2020
of this brief
This brief clarifies HMRC’s policy concerning the VAT
treatment of school holiday clubs following the First-tier
decision of 7 November 2019 in RSR
Sports Limited (RSR) (Decision
In particular, it clarifies how other businesses providing similar
supplies will be treated. It also invites anyone who considers that
they have received an incorrect ruling prior to the decision in RSR to seek a corrected ruling and a
refund of any tax incorrectly overpaid.
2. Who this applies to
Organisations that make supplies of school holiday club services and
RSR provided holiday camp
services to parents and their children and argued that these services
were exempt from VAT as the provision of welfare during the school
HMRC refused RSR’s
claim for repayment on the basis that holiday camps were activity based
and the supply was not one of welfare.
Supplies of welfare services are exempt from VAT under
Item 9 of Group 7 of Schedule 9 of Value Added Tax Act 1994. This
exemption is subject to the following 2 conditions.
1.The supply is by:
- a charity
- a state-regulated private welfare institution or agency
- a public body
2.The services are welfare services and goods supplied in connection
with those welfare services.
Welfare services include those directly connected with the care or
protection of children and young persons.
4. What’s covered by the exemption
In England, state regulated private welfare institutions and
agencies are establishments registered with or regulated by the Care
Quality Commission (CQC)
and Office for Standards in Education (OFSTED).
In Scotland it is the Scottish Commission for the Regulation of Care
(The Care Commission).
In Wales it is the Care and Social Services Inspectorate Wales.
In Northern Ireland it is the Northern Ireland Regulation and
Quality Improvement Authority.
HMRC Notice 701/2 Welfare, paragraph 2.2.1
explains that the welfare exemption applies to day care services (such
as those provided by a nursery, playgroup or after school club), but
activity-based clubs such as dance classes are excluded from exemption.
5. The FTT’s
decision and HMRC’s revised policy
The conditions set out in section 3
were applied by the FTT who
- RSR was OFSTED registered and
the holiday camps were supervised by OFSTED
- the holiday camps included both an activities element and a
- the activities element was emphasised by RSR in order to make the holiday
camp attractive to potential consumers
- the activities at the holiday camps were supervised but there was
no coaching or teaching of the relevant skills which differed from the
after-school clubs that RSR
- there was a much greater degree of staff qualification in the
after school clubs, emphasising the difference between the two
The FTT then considered
whether the predominant element of the holiday camps was childcare or
activities and concluded that it was the former although the answer was
In this case, the childcare element was not incidental to and
subservient to the activities that were being offered to the parents
The case could therefore be distinguished from Sports Academies
(Decision No TC05171), a case where the tribunal had held that the
activities element predominated.
The important key features were:
- the members of staff were merely supervising activities
- they did not hold any coaching or teaching qualifications
- there was no external standard to which the services were being
- the activities were merely an adjunct to the essential service
which was childcare
Other providers supplying services can similarly exempt their
supplies where the facts demonstrate that they qualify
and exhibit the key features set out by
the FTT in RSR.
In future, HMRC will not interpret activity-based clubs to include
those clubs exhibiting those key features. Such clubs will, therefore,
be included within the welfare exemption.
6. Procedure for seeking correction of an
Requests will be considered as long as there is proper evidence.
After an initial review HMRC reserves the right to ask for more
information to ensure that the 2 conditions of state regulation and the
predominant element being childcare are fully satisfied.
You’ll need to provide the following:
- evidence that the body is state regulated
- evidence that the protection and care of children is the
- whether the staff have teaching or coaching qualifications
- evidence that the staff are acting predominantly as child minders
If you have a current appeal before the FTT please provide any tribunal
If you think you have received an incorrect ruling and would like a
written clearance, please use our Non-Statutory
You should quote reference RCB 18 (2020).
Any business that has accounted for too much VAT may correct this by
following the normal error correction procedure. How to correct VAT errors and make adjustments or
claims (VAT Notice 700/45) explains this.
It is important to note that such adjustments are subject to a
4-year cap starting from the accounting period in which the error was
7. Further Information
You can find more information in VAT
Notice 701/2 Welfare services and goods and
the VAT Welfare manual.
If you have any questions about these changes please contact VAT: general enquiries.
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Article Published/Sorted/Amended on Scopulus 2020-11-17 21:53:54 in Tax Articles