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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4195
Experience:  FCCA FCMA CGMA ACIS
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I help run a private members club which has charitable status. We

Customer Question

I help run a private members club which has charitable status.
We supply alcholic beverages to our members which we buy in by the barrel and pay VAT on and then sell to our members
We want to give away one free beer occasionally for a hour on one day of the week if the member guesses a question correctly otherwise they pay as normal - Our question - is VAT chargable on this as we have alredy paid at source and are not charging for the "free" bevarage?
Also regarding our snooker tables we pay VAT on our power consumption at source via lights and charge our members for the time used on our tables . Our question : Is VAT chargeable again on that usage charge? I will need to get back to you to confirm payment as the decision is made by committee.
Submitted: 3 years ago.
Category: Tax
Expert:  bigduckontax replied 3 years ago.
Hello, I'm Keith and happy to help you with your question.
VAT must be taken as a whole over the whole business. The club would receive output taxes on sales and reclaim all input taxes. You cannot 'penny packet' unless you make exempt supplies then there are problems. Now I was the Treasurer of such a club for 13 years and asked HM Customs and Excise as they were then what VAT was due on donations and legacies. I was told they were outside the VAT envelope altogether. The provision of free drinks merely reduces the club's profit margins. The receipt for the club is nil so there is no output tax to collect.
In basic terms everything you sell is subject to VAT and the VAT on everything you buy offsets the VAT bill by the input tax it bears.
The snooker table is easy, the charge to members is a standard rated supply so if the charge is GBP 1-20 a frame the book keeping is Debit Cash/Bank 1-20, Credit VAT 20 and snooker sales a quid.
I do hope I have helped; remember as far as VAT is concerned everything is done in one big pot and accounted for quarterly to HMRC.
Customer: replied 3 years ago.

Hello Keith,

Thank very much you much for your reply.

This is as I thought and I appreciate the comprehensive reply .

This as I am sure you know will go back to our committee and having a definitive answer can put paid to all the endless questions and the going round in circles .

Many thanks

StefanSmile

Expert:  bigduckontax replied 3 years ago.
Delighted to have been of assistance, Stephan.
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Expert:  bigduckontax replied 3 years ago.
Thank you for your support.