The Scottish Football League (SFL) must account for VAT on gold medals worth £27,000 that it awards league-winning clubs at the end of each season. The Upper Tribunal ruled that it was ‘largely irrelevant’ whether the medals were a ‘business gift’ or whether they were awarded pursuant to some species of obligation.
The SFL awards the medals annually to the winners of its first, second and third division league points championships. It argued that their award was mandatory under the league’s rules and that the medals could therefore not be viewed as business gifts within the meaning of paragraph 5(1) of schedule 4 of the Value Added Tax Act 1994.
However, in upholding arguments put forward by Her Majesty’s Revenue and Customs, the tribunal noted that the medals were goods forming part of the assets of SFL’s business. Ruling that output tax had to be discretely accounted for on disposal of the medals, the tribunal ruled that, in awarding them, SFL was making a supply of goods other than for a consideration and that was so whether or not the supply was made as a gift or pursuant to an obligation.
SFL also argued that output tax had already been accounted for on the supply of the medals within its overall turnover on which it had already charged output tax on its various supplies, including sponsorship and broadcasting fees and membership subscriptions. However, in dismissing those submissions, the tribunal ruled that the purchase of the medals could not on any reasonable basis be viewed as related to any other transactions entered into by SFL nor could it in some way be regarded as an overhead cost of the business.