In HMRC v Esporta [2013] UKUT 0173, it was held that late paid gym fees are subject to VAT.

The Court of Appeal held that fees recovered by a health and fitness operator, in connection with a period in which a member of the gym was barred from using the facilities as a result of the non-payment of fees, still attracted VAT at the standard rate.

It was found that the fees were:

  • consideration for supplies of services by the gym, including the grant of the right to enter the premises of the club, and to use the facilities and services provided there
  • still consideration for the supply of these services, regardless of whether they were paid in advance, on time or late.

The fact that members were barred from the facilities during those months during which payment was not made on time did not break the link between the payments and the contractual services that were provided during those months. The fees were not, as the company hoped, compensation for breach of contract (in which case, they would be outside of the scope of VAT).


HMRC v Esporta [2013] UKUT 0173