02 Feb VAT Registered Clubs and Coaches – Are You a Limited Cost Trader?
Some VAT registered clubs and coaches who are on the Flat Rate scheme may see the amount of VAT they pay increase to 16.5% of their turnover when government changes to the flat rate scheme are imposed from 1st April 2017.
The changes were announced in the Government’s Autumn Statement and were introduced to counter ‘misuse’ of the scheme, whereby businesses were incorrectly using the wrong flat rate category.
The new rules have introduced a new category called a ‘limited cost trader’ and, if your club or sports business falls within the definition of this new category, your organisation will pay a flat rate of 16.5% from 1st April 2017, a rate considerably more that the 8.5% for organisations and individuals who currently qualify for the ‘sport and recreation’ category.
It is therefore important for any sports related business/club to review the new rules and determine whether they qualify as a ‘limited cost trader’ and, if so, whether they should remain on the scheme after 1st April or whether they would benefit from switching to the standard scheme.