In Esporta Ltd v HMRC (TC01475 – 24 October) a company (E) operated a chain of fitness clubs.
It required new members to join for a minimum of 12 months.
In some cases members failed to make the agreed 12 payments.
Such members were barred from using E’s facilities within five days of failing to make an agreed payment and E arranged for debt collection agencies to recover the outstanding amounts.
Initially E accounted for VAT on these payments on the basis that they were taxable consideration for supplies of membership services.
Subsequently it submitted a repayment claim on the basis that while it accepted that output tax was payable for the five-day period before access was barred it should have treated the balance of the payments as non-taxable compensation for breach of contract.
HMRC...
