VAT liability of school holiday clubs

VAT liability of school holiday clubs

Almost a year to the day of the decision in the case of RSR Sports Limited (RSR), HMRC has finally issued Business Brief 18/2020 acknowledging the decision and inviting claims from affected businesses.

RSR concerned a school holiday activity camp and whether their services were exempt childcare or taxable supplies of childrens’ activities.

To qualify for exemption under the welfare exemption, two conditions must be met as follows:

  • the provider must either be a charity, a state-regulated private welfare institution or agency or a public body; and
  • the services provided must be directly connected with the care or protection of young children and young persons.

Historically, HMRC has argued that holiday clubs and camps have predominantly been concerned with providing activity for children rather than with caring for them and this was supported by the case of Sports Academies, which was seen as setting a precedent.

However, in the RSR case, the Tribunal accepted that, despite offering activities to keep the children occupied and entertained, the predominant element of what the parents were getting was childcare during school holidays and, therefore, the exemption applied.

Crucially, the Tribunal commented that the fact that the staff were not qualified coaches or teachers and were merely supervising the childrens’ activities diminished the importance of the activity over the childcare.

The camps were advertised as activity camps and parents were told that their children would be entertained with lots of activities ranging from arts and crafts to outdoor sports and games. HMRC argued that advertising the camps in this way made the activities the predominant feature.

The Tribunal disagreed, noting that it was implicit that their children would be looked after but that what attracted parents was what was provided over and above the necessary care of their children.

Having now accepted the decision as setting a precedent for these types of holiday clubs, HMRC is inviting businesses that have accounted for VAT on these services but believe they should properly have been treated as exempt welfare services to submit claims going back four years.

The expectation is that claimants will primarily be OFSTED registered businesses and they will need to be able to provide evidence to show that childcare was/is the predominant element of their service.

In practice, this is likely to be proven in cases where the staff working at these camps are unqualified, either as teachers or sports coaches and there are no formal qualifications given out to children attending the camps.

As is always the case with VAT exemption, VAT recovered on associated costs will be offset against overpaid VAT and there may be an unjust enrichment adjustment where providers cannot show that their prices would not have been lower had exemption applied. That said, claim amounts could still be substantial.

Activity clubs, such as dance schools and gym clubs, will not be able to benefit from this exemption but will continue to benefit from the private tuition exemption if the correct conditions are met.

If you believe that your business may be able to benefit from either the welfare or private tuition exemption and would like to discuss this further, please contact a member of our VAT team at

VAT liability of school holiday clubs
VAT liability of school holiday clubs

VAT liability of school holiday clubs