The UK First-tier Tribunal has determined that a company which operates five-a-side football pitches and organises and administers competitive football leagues, is supplying two discrete services for VAT purposes.

Goals Soccer (the taxpayer) operated a chain of five-a-side soccer centres. Pitches could be hired for a single session (which would be standard rated) or through a block booking, usually for 10 or more sessions at frequent intervals (which would be VAT-exempt if certain conditions were met).

The taxpayer also operated and administered five-a-side football leagues. When a customer made a block booking, it could also elect to join one of these organised leagues. In such a case, the customer would sign both a Pitch Hire Agreement and a separate League Entry Agreement for which it paid a League Entry fee and a League Management Fee. Customers could also elect to join an organised league without hiring pitches and use third party pitches to play league games.

Pitch hire income comprised 82 percent of the taxpayer's turnover, with league registration and management fees totalling 2 percent.

The UK tax authorities (HMRC) took the position that the essential nature of the supply was of participation in a football competition and not a supply of land, and that there was a single supply in which no element was predominant. HMRC therefore asserted that all of the taxpayer's supplies were standard-rated.

The Tribunal concluded that there were two contracts and two distinct services, and that the taxpayer had not artificially split pitch hire from league management services. The league management services could be abandoned without affecting the pitch hire, and the Tribunal noted that customers could use the taxpayer's facilities in a number of different ways - using the taxpayer's pitches to play in one of the taxpayer's leagues, using the taxpayer's pitches to play in third party leagues, playing in the taxpayer's leagues but using third party pitches, or using the pitches without any league management services. In short, both pitch hire and league management services could be usefully supplied without the other.

The Tribunal also held that there was not a single, indivisible economic supply which it would be artificial to split on the basis of Levob. Both agreements could be entered into and cancelled together or separately, with separate contracts and separate prices. The Tribunal could identify nothing artificial in these arrangements.

The decision of the Tribunal is of interest in that it is one of very few cases in which it has been accepted that there are separate supplies made by a single supplier, even under separate contracts. Courts have consistently identified a single supply in cases of doubt. However, it is clear that the outcome rested not simply on the existence of two contracts but on the basis that the underlying facts strongly supported a mixed-supply analysis.

Despite this, HMRC was still inclined to challenge the position and seek to identify a single supply. It is therefore recommended that separate services are provided not just under separate contracts but by separate suppliers, as in the case of Lower Mill Estate, in cases where the VAT treatment of different aspects will differ.