Membership Organisations often offer a package of a variety of benefits to their members in return for a subscription. These benefits can range from a glossy magazine or an emailed newsletter to significant discounts and entry into exhibitions and even a ticket to the annual Gala Ball. And many Membership Organisations apportion their subscriptions between these various benefits treating them as multiple supplies for VAT purposes with VAT due on each element accordingly e.g. hard copy magazines at the zero rate and emailed newsletters at the standard rate.
In recent times HMRC have been challenging this treatment maintaining that members pay for a “membership” which is a single supply liable to VAT at the standard rate and assessments have been raised.
So it’s really good news that the First Tier Tribunal has agreed that a membership subscription can be treated as a multiple supply in the case of the Harley Owners Club for members owning a Harley-Davison motorbike where the Judge held that as the individual benefits in this case (a magazine, patches and pins, touring map, leather folder etc.) were simply too significant to be characterised as ancillary to the status of being a member of the club such as would be required to make this a single supply of membership.
However, this may not be good news for all. The decision goes into great detail about the relative value of the particular benefits which the member received and the status of membership and it is unlikely these would be seen in the same way for all Membership Organisations. As such it is likely HMRC will appeal further or take another test case to establish the position.
If you think you might be affected by this decision or if you’d like to discuss the VAT treatment of subscriptions (for example moving from hard copy magazines to e-publications) more generally please contact us on line or directly:
Head of VAT Services.
Tel: 01926 468707