11 February 2020

VAT reclaims for operators of childcare holiday camps

Any business with similar arrangements could be entitled to VAT refunds too.

A recent First Tier Tribunal has ruled that a provider of childcare holiday camps, RSR Sports Ltd, had overdeclared £229k of VAT on their holiday camp services. Any business with similar arrangements could be entitled to VAT refunds too.

RSR believed that its services were exempt as they are welfare and childcare services. HMRC disagreed and believed the activities were standard rated as a result of being sporting activities. RSR successfully argued at the First Tier Tribunal that childcare was the predominant service and the associated sporting activities should not affect their VAT exemption.

This is an interesting and welcome decision for those operating in the sector. The Tribunal commented on the similarities with a previous case; however, there were differences that distinguished them. An important point in RSR’s case was that the sports activities at their holiday camps were not undertaken by qualified coaches, they were provided as part of a childcare service.

We understand that HMRC are considering the decision and may well appeal against it; however, this case shows that there is a fine line between an activity being closely connected with welfare services or not.

RSR received a refund of the VAT incorrectly declared and paid to HMRC over the last 4 years. Others could be entitled to similar refunds. Equally those who already record similar activities as being exempt need to ensure that contracts and all advertising material are worded correctly to minimise any challenge from HMRC.

We would be happy to share our experience with anyone operating in this sector who is unsure of their position. If you would like to discuss this decision and how it may affect you, please get in touch with us as soon as you can.

The information in this blog should not be regarded as financial advice. This is based on our understanding in February 2020. Laws and tax rules may change in the future.