Sports Club / Trading / VAT registration

I am a member of a sports club. The Club itself is not VAT registered. It has a bar/function room that is hired out to the public which is VAT registered. The question is, can the club create another "trading entity" that would be VAT registered? The sole purpose of this new entity would be to buy/sell sport equipment for use within the current club, but also to trade with "other" clubs. If that is allowed, what level of activity would be required to show that the business was trading in sports equipment? Can that new entity also then rent it assets to the sports club? Would that be a VATable supply?

If you are saying the club is not VAT registered but the bar is, then that would indicate that the bar is a separate legal entity (Ltd) to the sprots club which is likely going to be a limited by guarantee entity or some form of association or unincorporated body, but the point being is that a VAT registration belongs to the legal person/entity, so if the bar is VAT registered and the club is not, then there must be two different legal entities in play here. Why would you therefore need another Ltd to trade sports equipment? You already have a Limited company (the bar) that makes taxable sales and so why create another (third) company just to buy sports goods to sell or rent back to the main club? There are costs associated with setting up and maintaining companies, filing requirements, etc. But you can setup any number of companies if you want to, but comes back to the big question, why? If you are happy to have a NewCo that buys/sells sports equipment and you want to keep that trade separate from the bar (perhaps different ownership for example), many golf clubs often have the pro-shop as a separate company. You have used quotes marks for "trading entity", either the business is trading or it isn't, definitions can be found here https://www.gov.uk/hmrc-internal-manuals/business-income-manual/bim20000 and you need to be comfortable with the definition of business income. Without details as to what you are buying, what scale, how often, costs involved and expected profits then it's difficult to say whether your plans are a business or not. But lets say the plan is to buy a new lawn mower costing £100k + £20k VAT for use by the Club and other clubs...NewCo could reclaim the VAT on the purchase and then would charge VAT on the hire/rental to the Club and other Clubs. That seems like a business which has regularity (monthly rental), consistency and purpose. Any such rent/hire fee would need to be market value where the supplier is VAT registered but the supply is made to a non-VAT registered business that is connected to the supplier (ie Club is connected to the NewCo). So you can't by the mower (in my example) and then rent it for £1 per year to the Club. See link here https://www.gov.uk/hmrc-internal-manuals/vat-valuation/vatval07300 You don't state what your role is at the club, a member is not necessarily on the committee, but if you are responsible for the financials of the Club then you really should be seeking advice from your Accountant or speak to the members as one of them will be a retired Accountant for sure!

Hi andrewwb1,
If you are a club and you are making taxable supplies then you can register for VAT voluntarily if you are trading below the Registration threshold of VAT which is currently £90K.
If you are already trading above the threshold then there would be a requirement to register for VAT.
Please see the guidance below:
3. Working out whether you need to register.
If you are selling sports equipment to other clubs then this would be a taxable supply.As part of your VAT registration you may need to provide evidence of this in the form of purchase invoices/contracts etc.
If you are renting out a bar/function room then this would be an exempt supply.
However if you place an Option to tax on the property then you will then be required to charge VAT on the rent.
Please see below:
2. The scope of an option to tax.
Thank you.

Thanks for the reply Jay. As for my role, I am just a member, not a committee member or an official of the club. I have been asked my opinion as i am a qualified accountant - but a long time away from the front line of VAT requirements! My suggestion to them was that they pay for the expert opinion. The idea of a separate Ltd Co is the way the idea was pitched to me. To your example, if NewCo bought the "mower" for £100k and rented it to the connected club, presumably VAT would need to be added to the rental? I understand that it would need to be at an "arms length" rate rather than £1/month.