Leisure services for members of the public can now be treated as non-business activities for VAT purposes, HMRC has confirmed. Previously, local authorities had to treat these supplies as business activities and either:
- charge their customers VAT at the standard rate; or
- apply the exemption.
After several local authorities challenged this treatment, the courts ruled that local authority leisure services are provided under a statutory framework and can be treated as non-business for VAT purposes.