Conservative Club Refused ‘Political’ Exemption from VAT

Whether particular tax exemptions apply can often be a matter of impression and that was certainly so in the case of a Conservative Club which sought a £17,000 VAT rebate on the basis that it was a non-profit making organisation with political aims and thus excused from paying the tax on its members’ subscriptions.

The club relied on the tax exemption contained within Article 132(1) of the Principle VAT Directive. It argued that the club only existed because of its members’ shared political values and their mutual support for the Conservative Party. The club was a focal point for recruiting and organising party supporters and members enjoyed regular political dinners and speeches by visiting party grandees.

In rejecting those arguments, the First-tier Tribunal (FTT) found that members were just as interested in the club’s social amenities – including a cut-price bar, sporting facilities and frequent live entertainment – as they were in politics. Having read the minutes of the club’s AGM, the FTT was struck by the very few references to political matters. In those circumstances, the club could not benefit from the exemption.