In the legal dispute between Cambridge University Boathouse Limited (CUBL) and Her Majesty’s Revenue and Customs (HMRC), the First Tier Tribunal (FTT) decided in favour of CUBL. As The Times headline-writers put it, “Cambridge rowers sink taxman’s boathouse claim”.
HMRC wanted Cambridge to pay £575,000 in VAT on the recently constructed £4.9 million boathouse in Ely. The dispute relates to a rule that allows construction costs to be exempt from VAT if the facilities in question benefit a sports club and not individuals. HMRC took issue with Cambridge being exempt, as they contended that the boathouse was for the use of individual rowers rather than the rowing clubs* as a whole.
The opposing parties did agree that CUBL was an “eligible body” and that the supply, the leased boathouse, was of “services closely linked with and essential to sport”, and that the direct recipients of the supply were the clubs, who were corporate bodies, and not individuals. The question was whether these corporate bodies were really the ones benefitting.
The tribunal was asked whether the “true beneficiaries” of the boathouse were the rowers, as HMRC contended, or the clubs themselves, as CUBL contended. The tribunal decided that the clubs were the true beneficiaries of the leased boathouse because they have the right to use the boathouse for their training programmes and the right to store their equipment, and they pay for those rights. Whereas the rowers do not have a right to access or use the boathouse unless invited by the clubs, and cannot store their own equipment at the boathouse.
HMRC argued that by rowing, and by giving up their image rights, the rowers were indirectly paying to use the boathouse. This did not hold water with the tribunal who thought it clear that the rowers row because they hope to participate in the Boat Race, “…they provide their labour and give up their image rights as a condition of that participation, not in exchange for the right to use the Boathouse”.
During the legal wrangling HMRC’s barrister asked Dr Susan Hood, a director of Cambridge University Women’s Boat Club, if the training improved the rowers’ fitness. Dr Hood responded that these participants were elite athletes who were fit before joining the team and the level of training demanded by the Cambridge coaches “pushes boundaries” to a point where the clubs had to be careful not to damage the athletes’ health.
The tribunal heard of the tough selection procedures that rapidly reduce the number of varsity hopefuls within the first month of the campaign. For example, September’s dreaded 5k-erg test. The minority of athletes who escape the initial cull are then required to participate in a “gruelling training programme” which includes 12 sessions per week with a day off only every two to three weeks. It was noted that this requires the participants to be committed, to remain motivated, and to make sacrifices.
Many former Boat Race competitors and Cambridge rowing alumni donated to the new boathouse and with the help of a University loan construction began in November 2015. Practical completion was achieved by the end of January 2017. The opening statement of the 99-year lease says, “the shared goal of the Cambridge University Rowing Clubs … is to win all the boat races against Oxford, every year. Each will have as their paramount goal the winning of their own race against Oxford”.
As the light blue rowers remain focussed on beating their Oxford counterparts, CUBL will hope to reach an agreement with HMRC on “further issues”. But as it stands the tribunal has ruled that CUBL will be exempt from the £575,000 VAT charge.
*The clubs are; Cambridge University Women’s Boat Club, Cambridge University Boat Club, and Cambridge Lightweight Rowing Club.