Conservative Weekly Draw Banner Image

Club Law and Management

by Philip Smith, Secretary of the A.C.C.

In this month's edition of the Magazine, we have taken a break from the popular Q & A format in order to bring readers up to date with various legal issues that will have an effect on the management of most clubs.

Any club wishing to receive further information on the matters covered below is welcome to contact the ACC. As I often remind Club Secretaries and other Officers who get in touch for help and advice, the ACC was founded and exists to help our Member Clubs. We want to know if your Club has a difficulty and can only offer assistance if we know there is a problem.

The fact is that a problem affecting your club is highly likely to be affecting others too. The sharing of information and interchange of ideas is one of the many strengths that the ACC, as a National Organisation, is  able to offer.

HM Revenue and Customs - VAT on Pool and Snooker Tables update

The ACC has confirmed with HM Revenue and Customs that any amount paid by members of a Member's Club for use of either Pool or Snooker facilities (whether this is paid directly into the machine or via a light meter) is exempt from VAT. Any Clubs which have been paying VAT on these amounts should contact HMRC in order to obtain a refund for the previous 6 years.

An Officer of HMRC, Mrs. Ann Price, confirmed to the ACC that 'any additional amounts that members pay to use snooker / pool tables in addition to their standard rated yearly membership is exempt from VAT - VAT notice 701/45 Paragraph 3.5.7'.

The relevant extract from that notice is as follows:
"You should exempt any additional amounts the members pay to use the sports facilities such as pool or snooker tables." - Public Notice 701/45, s 3.5.7 Paragraph 2.

Therefore any such sporting facilities should be exempt from VAT, if you have paid VAT on such items in the past four years then we advise you to contact HMRC and apply for a refund.

Alcohol Sales to Minors

Last year sixty-six licensed venues had their licences suspended for serving alcohol to minors, in addition to fines imposed on the employees who served the alcohol. It is worth reminding all employees to 'Think 21' and request identification of anyone who looks under that age. This is particularly important when the Club might be hosting events which young persons may be attending.

Foreign Satellite Television Equipment

After the biggest organised raids so far concerning foreign satellite television, three people have been arrested and over £70,000 of cash and equipment seized. This follows on the heels of a fine levied against a Club and a personal fine levied against an Officer of a Conservative Club which housed similar equipment.

Until the ECJ has considered a verdict on the European Satellite case the ACC continues to strongly advise Clubs not have any equipment of this type on their premises.

Happy Hours

Currently, there is no legislation for either England or Wales prohibiting Clubs or Pubs reducing drink prices at certain times each day although this is often mooted by both MP's and the Media as a possible solution to binge drinking.

In Scotland they have introduced laws which make it a requirement for any price change in licenced premises to remain in effect for at least 72 hours. In reality this has meant that Pubs and Clubs in Scotland now offer two tiers of pricing, cheap drinks Monday to Thursday and an increased price drinks menu for Friday-Sunday. There is no indication that this will be introduced into either England or Wales.

Rank VAT case update

The case is still ongoing, with HMRC appealing the original ruling by the VAT and Duties Tribunal for VAT overpaid on Bingo and Amusement Machines. The appeal is currently scheduled to be held in April 2010 so we hope to have a further update available soon after that.

Employment Issues - Sickness

The first UK case, Shah v First West Yorkshire, to follow on from the recent European Court of Justice's ruling, which allowed employees to carry over accrued holiday time if they are unable to take it due to sickness - Pereda v Madrid Movildad, has affirmed that decision. Whilst this decision is not binding on other tribunals, it is likely the decision in Shah will be presuasive. This effectively means that is an employee, who is off on either short or long term sick leave, is unable to take their accrued holiday they should be allowed to take it at the first available opportunity after they have returned to work, even if it is in a subsequent holiday year.

It should be remembered that recent cases have affirmed that employees continue to accrue holiday time, even whilst on short or long term sickness. This means that there may be situations where an employee has been off on long term sick leave and when they return to work they are entitled to take holiday from a previous holiday year immediately.


HMRC still have two ongoing court cases against Clubs which involve the reclassification of specific gaming machines to new and higher bands of Amusement Machine Licence Duty (AMLD) and VAT. The gaming machines which have been reclassified are the Automated Lottery Machines (B3A) and Skill based Gaming Machines.

It is accepted that following the new classifications of these Machines, Clubs will need to comply with new rates of AMLD and payment of VAT on all future proceeds. However, HMRC are attempting to retrospectively apply these new classifications leaving Clubs facing tax bills of several thousands of pounds. Up until the recent reclassification, these Machines have always been considered by HMRC to legitimately be tax free or to justify a lower rate of tax.

Automated Lottery Machines have been in Clubs for over ten years. During this time they have been exempt from both VAT and AMLD. HMRC have inspected these Machines on countless compliance visits without challenging their lottery status and exemption from VAT and AMLD. At no point during the usage of these machines was the prospect of tax raised.

Following the implementation of the Gambling Commission set out detailed technical rules that state that the newly categorised B3 A Machines must only offer lottery games. B3 A Mahcines have to be approved by and independent testing institute to ensure they comply with lottery rules. In other words the Gambling Commission and DCMS insit they are lottery games, yet HMRC refuse to accept this.

We have a situation where two Government Departments have conflicting interpretations of the same law.

Skill Based Gaming Machines have traditionally been categorised as Skills with Prize (SWP) Machines. These have not been liable to AMLD but following a statement issued by HMRC last year, these machines are to be reclassified as 'Games of Chance'. This will render them liable to AMLD.

This change of status is due to come into effect as of 1st April 2010, a period which has already been extended given the very serious concerns which have been expressed. HMRC again intends to impose retrospective AMLD tax liability on both Clubs and, in this case suppliers for a period dating back three years.

The manufacturers of these machines have launched an appeal on behalf of Clubs. Whilst this appeal is ongoing, HMRC has instructed all machine suppliers to provide lists of Clubs that have been supplied with these Machines and are raising assessments with individual Clubs.

The ACC, in association with CORCA, has urged Members of Parliament to support an Early Day Motion put down by Philip Davies, MP, a Vice Chairman of the ACC, decrying the use of retrospective taxation in this manner. We hope that we can use this pressure to influence a change of policy and a reconsideration of these decisions. We will continue to keep Clubs updated on this situation.

The text of the Early Day Motion is as follows:

"That this House is alarmed that large numbers of traditional working men's clubs, ex-servicemen's and political clubs may have to close following the decision of HM Revenue and Customs to serve them with assessments to pay value added tax (VAT) and duty on category B3 A automated lottery machines operating on their premises, having changed their status from lottery machines to gaming machines; notes that unlike gaming machines, category B3 A machines do not dispense cash prizes, and that winning tickets are redeemed via the club; appreciates that there is no private gain to be had from such machines as they are simply another source of fundraising for the club and the revenue often serves as a lifeline to smaller clubs; points out that HM Revenue and Customs consider paper-based lottery machines, which differ only from automated lottery machines in that they display the result via paper, to be exempt from value added tax and duty; draws attention to the fact that the Gambling Commission still states that category B3 A machines can offer only lottery games; points out that provide members' clubs are not-for-profit organisations and as such do not ahve the resources to pay retrospective tax bills; and calls on the Government to halt this process, taking into account its negative economic and social impact on local communities up and down the country."