New VAT considerations arising from the Covid-19 pandemic

For many organisations within the sports sector, VAT is one of the largest tax flows. And for those that provide exempt sporting services, irrecoverable VAT can be a significant cost.

As a result, it’s important to consider any ways that VAT incurred on costs can be mitigated and the cash flow of VAT payments managed effectively. This could be achieved through focusing on the VAT liability of supplies, construction planning or implementing solutions to maximise VAT recovery (particularly through partial exemption). Undertaking cost reduction reviews may also help sports organisations to obtain retrospective VAT reclaims and secure prospective savings.

Covid-19 impacts

Following the Covid-19 outbreak, the Government introduced a number of helpful measures, such as the ability to defer paying VAT return liabilities falling due between 20 March 2020 and 30 June 2020. However, it is important to consider the long-term impact of the pandemic on the sports sector. Organisations will need to consider various factors (all of which carry tax consequences) including:

• use of venues – Covid-19 has prevented the use of sporting venues (in particular, arenas and stadiums), hitting income hard and bringing potential tax consequences from any change in use.
• operating models