"SavetheUKCC" petition

[David Shepherd]

Going forward it may be sensible to argue that legislation should be altered so that entry fees for juniors are zero rated or exempt. I think this is more likely to be successful than asking for chess entry fees in general to be exempt or zero rated.

[Roger de Coverly]

Going forward it may be sensible to argue that legislation should be altered so that entry fees for juniors are zero rated or exempt.

At a local level, they already are, as are adult entry fees. An organisation whose tournament organisation has modest entry fees and prizes isn't going to get the turnover to need to register for VAT. It cannot though reclaim VAT on outgoings. It's only when you scale up to a national body that you hit the VAT issue.

Physical sports are VAT exempt, the attempt to get Bridge and by implication other Mind Sports reclassified failed recently, as those in government responsible for collecting tax appear well set against such an exemption.

[Alan Walton]

Ideally all chess would be VAT exempt, but it is very unlikely that will happen whilst not being recognized as a sport

Regarding this case, to me it looks like it was a little naive/lazy not applying VAT to schools fee and then letting to schools claim that back

£300k is a substantial amount of money and I think it will be very likely the HMRC will aim to get that paid, no matter what happens I doubt there will be any reprospective amendment to this figure

[Roger Lancaster]

Two entirely separate issues here, I think. First, whether any prospect of changing the law. Second, because legal changes (even if one can be agreed) are rarely retrospective, how does that leave whoever is facing a £300k HMRC demand.

[Michael Flatt]

Regarding this case, to me it looks like it was a little naive/lazy not applying VAT to schools fee and then letting to schools claim that back

The link with schools is very limited and only occurs at the first round, where school chess clubs, out-of-school chess clubs and organisers of "last chance saloons" pay a small fee (currently, £40) to run competitions that allow players to qualify to the next stage, the Megafinals (a county level event).

One has to look at the structure of the competition to understand where the VAT liability occurs. It is at the Megafinal and later stages (Gigafinal, TerraFinal, Challengers, Silver Plate) in which the fees of all entrant are paid directly to UKCC where the majority of the turnover and VAT liability is created.

The Competition could be restructured to minimise its future VAT liability.

The sum £300k must represent the tax liability accumulated over several years during which the UKCC have been in dialogue with HMRC.

[Alan Walton]

Thanks for clarifying that Michael; it now looks more likely they didn't understand the rules of paying VAT or believed they weren't eligible, but I still suspect they will have to cough up eventually

[Nick Grey]

Looks like a historic issue which the organisation has been non-compliant with.

Not clear that sports organisations are exempt from all VAT. For example the number of sports bookings in a year. Clubs that have one team generally have to pay the 20% in their charges on pitch hire.

Schools cannot claim the tax back unless got a VAT invoice. Even then if claiming back (i.e. from LA as a LA school) will have to check first with the VAT expert at the local authority. Non compliance in those cases HMRC will raise the penalty which is chargeable against the Governing Body.

[Adam Raoof]

https://www.thegazette.co.uk/notice/2594274

[Alan Kennedy]

whatever he did wrong it is very sad. Looks like someone is needed to take over the UK chess challenge. Will the ECF be making the Official receiver an offer.

[Jonathan Bryant]

Will the ECF be making the Official receiver an offer.

Why would the ECF do this?

[Michael Flatt]

Will the ECF be making the Official receiver an offer.

Why would the ECF do this?

I don't see the ECF stepping in either. Perhaps, one of Mike's co-organisers might replicate the event, under a different name, and engage him as a consultant. It would need to be restructured to overcome the VAT problem.

Delancey was an important sponsor. Would they want to continue?

[Andrew Martin]

I sincerely hope that some way can be found for the UKCC to continue. I wish Mike and his UKCC colleagues all the best through this obviously very tough time.

[Richard Bates]

Will the ECF be making the Official receiver an offer.

Why would the ECF do this?

I don't see the ECF stepping in either. Perhaps, one of Mike's co-organisers might replicate the event, under a different name, and engage him as a consultant. It would need to be restructured to overcome the VAT problem.

Whilst aware that all discussion is basically founded on speculation, it's not actually clear that there is a VAT "problem" to be restructured away. Assuming no deliberate malpractice there appears to be an administrative problem which has led to a failure to apply VAT correctly, but that is a different issue, I think?

Does anyone know how much the Delancey sponsorship, which presumably would have attracted VAT, was worth?

[Mick Norris]

Will the ECF be making the Official receiver an offer.

Why would the ECF do this?

Indeed, an offer for what?

[Michael Flatt]

Whilst aware that all discussion is basically founded on speculation, it's not actually clear that there is a VAT "problem" to be restructured away. Assuming no deliberate malpractice there appears to be an administrative problem which has led to a failure to apply VAT correctly, but that is a different issue, I think?

Does anyone know how much the Delancey sponsorship, which presumably would have attracted VAT, was worth?

Quite right. I think that Mike was trying to keep entry fees down and his mistake was not to charge VAT. At the Magafinal stage the £15 Entry fee should have been £18.

What I am suggesting is that rather than having all fees collected by a central body the individual organisers of Megafinals who organise qualifying events should be responsible for the finances of their own events, so that they incur no VAT.

The Megafinal organisers then pay a levy to the central organisation to register their event. It reduces the level of the turnover of the central organisation. It is the system that the London Junior Chess Championships use for running their qualifying events.