Is Bridge a sport for VAT purposes? The ECJ's decision in English Bridge Union v. HMRC

Published 14 November 2017 By: Sarah Bruce

Is Bridge a sport for VAT purposes? The ECJ's decision in English Bridge Union v. HMRC

Is it sport if I'm not out of breath?

No, according to the European Court of Justice (ECJ) in a recent judgment (English Bridge Union Limited v HMRC Commissioners1).

In order to be classified as a sport for VAT purposes and benefit from the VAT exemption for sports and physical education, the ECJ judgment states that an activity must involve a certain amount of physical activity. Unusually, the ECJ's decision contradicted the opinion2 given by Advocate General Szpunar earlier this year, which had concluded that the activity in question (a competitive card game) was likely a sport.

This article examines:

  • The background to the decision

  • Tribunal cases and the referral to ECJ

  • Implications for other sports

  • Impact for the English Bridge Union



Contract bridge (or "bridge") is a trick-based card game played by four players. A competitive version of the game (duplicate bridge) is often played in competitions whereby the cards held by each player are replicated across all tables, meaning that the winner is determined by skill and performance rather than chance.

The English Bridge Union (EBU) (the English national body) organises competitions which include an entry fee, and it sought to argue that these entrance fees should be exempt from VAT under VAT Directive Art 132(1)(m) (represented in UK legislation by group 10 of schedule 9 of VATA 1994) on the basis that the activities constituted sport. The EBU argued that duplicate bridge should be treated as a sport because of its competitive nature and the significant mental input and practice required from participants. HMRC disagreed, taking the view that bridge was not sufficiently physical in nature to constitute a sport.

The EBU however believed that it had an arguable case. Indeed bridge is recognised as a sport by the Olympic Association, and there is precedent for this approach within other UK legislation - the Charities Act 2011 recognises that both physical and mental activities can constitute sports3.


Tribunal cases and referral to ECJ

The EBU attempted to argue its position in the Tax Tribunal4 but was unsuccessful, and the case was referred to the ECJ on appeal. The Advocate General's opinion, published in June this year, was that the definition of sport should be "the training of mental or physical fitness in a way that is generally beneficial to the health and the well-being of citizens". The Advocate General stressed the importance of mental, as well as physical, training and on that basis he argued that bridge should be treated as a sport.

However the decision of the ECJ does not follow the Advocate General's approach and instead suggests that the interpretation of the word "sport" for these purposes should be determined by reference to three factors:

  1. the usual meaning of the word;

  2. the context in which it is used; and

  3. the purpose of the VAT exemption in question.

The ECJ's view was that all three of these factors in this case pointed to a definition of sport being "activities with a not negligible physical element". Additionally, the Court commented that the competitive nature of an activity was not of itself sufficient to determine that an activity was a sport.


Implications for other sports

The ECJ seems to have come to a reasonably justifiable conclusion in this case, and one which is probably in line with what most lay persons would have expected. The decision will be met with interest by the various commentators5 who had noted that a decision in line with the Advocate General's opinion would potentially have opened the door for a wide range of activities to seek sports status and could have potentially muddied the water in this area. However the judgment raises an interesting question as to where the line between sport and non-sport should now be drawn.

HMRC VAT Notice 701/45 includes a list of activities which HMRC considers to be 'sport' for VAT purposes, and a number of these activities (for example shooting, darts, snooker, petanque, and ballooning to name a few) are more sedate than traditional "athletic" sports. Many of these sports rely heavily on the player's mental skills rather than necessarily requiring extreme physical exertion. For example many of the most important skills of a successful snooker player are mental rather than physical, such as a detailed understanding of angles and momentum, and tactical awareness. A snooker player will rarely be out of breath.

This therefore raises the question as to whether the EBU decision means there is a risk that HMRC might seek to "downgrade" some of the less strenuous activities on the basis that the physical element is of a lesser importance than the mental element.

However this course of action seems unlikely. The word used in the judgment is "negligible", rather than simply "minor" or "small". Using the ordinary meaning of this word6, this implies that a would-be sporting activity will only fail the test if the physical element is 'so small or unimportant as to be not worth considering'.

It is not possible to be certain as to how HMRC (or any other tax authority) will choose to apply this test, however it would seem that a sensible application of the test would be an assumption that the definition of 'sport' requires that the physical element must impact on the outcome of the activity. A way to illustrate this would be to imagine that a competitor was for some reason unable to perform any physical movement. It is feasible that a player in a bridge tournament could remain motionless and instruct a proxy to physically play the required cards on their behalf, without conferring any undue advantage. By contrast, it would clearly not be possible for a snooker player to instruct a third party to play the relevant shot on their behalf. The difference is that snooker requires not simply the mental skill of determining the correct tactic and the required angle etc, but also the physical skill required to implement that play. A similar example might be to question whether the game in question could be played electronically using computers – again, it is feasible that a bridge competition could be administered through a computer program, but a snooker match could not.

However this analysis is not without problems. The illustrative example above will not apply to all sports - for example the rules of cricket allow an injured batsman to delegate one of the most physical elements of the game (running between the wickets) to a "runner". And by isolating the physical element alone, does this mean that the children's card game of "snap" could potentially succeed where bridge failed, because it requires an element of quick reaction time?

An interesting point in the VAT Notice is the inclusion of the sport of ballooning. Success in competitive ballooning is determined by which pilot can, by the use of her skill and experience, use the balloon's mechanisms (such as the burner) to get closest to markers placed by officials. Arguably the impact of the pilot's own physicality is minimal. This therefore again raises the questions posed by the examples above – could the competitor instruct a proxy/co-pilot to perform the necessary physical tasks (eg working the burner) on her behalf? Could the burner even be managed remotely by a computer program feasibly? If the answer to these questions is yes, there could be an argument that ballooning should not be treated as a sport for VAT purposes.


Impact for EBU

The ECJ decision confirms that the EBU will not be able to rely on the sports exemption in order to exempt supplies made in the course of competitions (or to claim back the significant sums of previously-paid VAT which it was seeking). However the door is not necessarily fully closed in terms of the EBU's VAT position. The EBU judgment refers obiter to the exemption for "cultural services", and implies that this might potentially be an alternative route to enable the EBU to exempt its supplies, commenting that this exemption might be possible if "the activity, in the light of the way in which it is practised, its history and the traditions to which it belongs, holds such a place in the social and cultural heritage of a country that it may be regarded as forming part of its culture ".

However on the basis that it has taken more than four years to reach this point it remains to be seen whether the EBU would have the appetite to pursue an alternative VAT exemption.

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Sarah Bruce

Sarah Bruce

Sarah Bruce is a Director in the Tax Team at law firm Walker Morris LLP.