More and more shoots are having to battle with VAT – a recent court case has shown that VAT for Syndicates is not just. Here Douglas Gordon, Saffrey Champness VAT expert explains more.
Hard on the heels of the Thimbleby case comes the welcome decision of the Tribunal in the case of Edward George Harrison, in which it was held that the running of two shooting syndicates fell outside the scope of VAT.
The case will provide valuable assistance to the shooting community generally because it deals with the common situation where a landowner grants shooting rights to a syndicate in return for the provision of a number of days of shooting.
The courts have previously considered shooting conducted by landowners. (see Lord Fisher and John Oswald Williams) In this case the Appellant was not the landowner but a licensee (shoot tenant) in relation to two distinct although neighbouring shoots.
In the first case there was a grant of shooting rights to the Appellant from a single landowner, while in the second case two other landowners were involved. The first syndicate comprised of the Appellant and his close friends whereas the second was an offshoot of the first but did not include the Appellant personally. Each syndicate operated its own bank account and employed its own keeper. Some costs were shared, and the Appellant generally managed both syndicates. There were no ‘let’ days to third parties. Surpluses or deficits were carried forward from year to year.
Several alternative arguments were considered:
- that no supplies were made for VAT purposes;
- that the only supplies by the Appellant were of the administration of the shoot (and below the VAT registration limit);
- that the only supplies made were of shooting rights or the provision of a day’s shooting (and below the registration limit),
- that if any supplies were made (regardless of their nature), they were not made ‘in the course of a business’ which is a basic requirement for something to be subject to VAT.
The Tribunal decided that the Appellant was not required to be registered for VAT, and specifically held on the facts that :
- the licences granted in the name of the Appellant were granted to the syndicates and therefore the Appellant made no supplies of shooting rights, or of providing a shoot, to the syndicate members.
- that the Appellant did provide management services but these were below the registration limit. Furthermore, the Tribunal also said that, if it was wrong about there not being a supply of shooting rights, that supply was in any case not made in the course of business because its predominant concern was social enjoyment.
HMRC argued that the ‘free’ days provided to the landowners in return for the grant of the shooting rights were the equivalent of ‘let’ days, but the Tribunal specifically rejected this, pointing out that these days were consideration given by the syndicates not the exploitation of the rights in return for a fee.
The Tribunal also held that the Appellant could not be punished for failing to register for VAT and also awarded costs against HMRC.
On the whole, then, this was a comprehensive and no doubt satisfying win for the taxpayer, and a serious reverse for HMRC’s “National Shooting Project” (as it was referred to in the decision).
It is useful confirmation that the courts are prepared to apply common sense, and a useful reminder to HMRC to do the same. Although this case is helpful, readers should remember that it does not create a general rule that all syndicates are VAT free – every case has to be decided on its own facts.
If you are concerned about issues relating to your syndicate or shoot and VAT, then please contact Douglas Gordon by clicking here.
