DROITWICH Spa Boxing Academy, which has trained national champions and helped troubled young people turn their lives around, could face closure after being landed with a £52,000 VAT bill by Her Majesty’s Revenue and Customs (HMRC).
The club officially opened its new £300,000 purpose-built premises in November last year after years of hard work – £170,000 came through grants and £100,000 was loaned from Wychavon District Council, which the club is paying back at £4,000-a-year.
The rest came from the club’s reserves or fund-raising.
Village halls and similar buildings, such as charitable organisations, are not liable for VAT and the boxing club, a registered charity, believed it would fall into that category.
But, after building the multi-purpose sports hall, the club was sent the HMRC bill.
The club’s secretary Chris Andrews said: “We are a boxing club that caters for the whole community.
“We take referrals from the Probation Service, social services and the Youth Offending Team.”
Over the years the club, which is run solely by volunteers, has trained national champions, had boxers captain the national team and helped scores of disruptive and troubled young people turn their lives around.
MP Sir Peter Luff, who was contacted by the club, said he greatly admired Mr Andrews and all the volunteers involved for their dedication and work.
“I have been making representations to HMRC and arranged a meeting with a Treasury minister, but frustratingly I don’t feel the academy’s case is being understood.
“If HMRC insist on payment, the club will almost certainly close and they will get nothing.
“It is a real community resource and if closed it would be a disaster for the town and the county.”
This week, Sir Peter raised the issue at Prime Minister’s Questions.
After providing background information about the club and describing it as ‘a shining example of the Big Society’, he asked
David Cameron: “Does the Prime Minister understand my deep concern that the blinkered decision of HMRC to insist on a draconian interpretation of the VAT rules on its new building will result in the academy’s closure?”
Mr Cameron said he knew what an important job the Droitwich Spa Boxing Academy did and added the Government would look carefully at the case.
But he added: “Unfortunately zero rating of VAT on construction services is very limited and doesn’t apply to buildings used as sports clubs.”
He said HMRC was willing to discuss the club paying the VAT bill through the Time to Pay Scheme.
Sir Peter said: “I know the treasury is able to waive VAT in some instances – the Chancellor did so last month for the poppies at Tower Hill.”
He added he raised the issue with the PM because of the club’s vital role turning young people’s lives around, hoping a solution could be found so the club could stay open.
And he said he would now work with the academy, the ABA, Sport England, Wychavon District Council, Worcestershire County Council, Droitwich Spa Town Council and HMRC to safeguard the club’s future.
DROITWICH AMATEUR BOXING ACADEMY STATEMENT
We thank Peter Luff for putting the plight of the Droitwich Amateur Boxing Academy to the Prime Minister in the House of Commons and we appreciate him fighting our corner.
Whilst David Cameron clearly recognised the Academy’s sterling role within the local community, the spectre of having to pay this unforeseen tax bill still hangs over us.
Regrettably, with the best will in the world, we are presently not in a position to pay the amount sought, either as a lump sum or in sizeable instalments. We are a registered charity, do not operate as a commercial venture and are run entirely by volunteers. Subscription income is minimal and we are contracted to providing Wychavon District Council with loan repayments of £4,000 a year, so our financial constraints are already tight without any consideration of this VAT payment.
If we are forced to pay the tax bill and either HMRC are unable to levy a realistic repayment or we cannot find an alternative arrangement over the building’s ownership then the Academy’s closure remains a distinct possibility.
Placing the Academy into liquidation at this time would be tragic and wholly counter-productive, especially as HMRC may not be able to recover their money and the local community could be left with the possibility of an empty building and no functioning boxing club for the first time in almost 40 years. The building is situated on land owned by Wychavon District Council and covenanted to the National Playing Fields Association as custodians of the King George’s Fields Trust. Special permission had to be obtained to build there, and this was specifically for the Boxing Academy, so there would be massive restrictions placed on any body or organisation seeking to purchase it for alternative use.
We have always been clear in the planning and building of our new gymnasium that we have two main objectives – to be an elite sports club (amateur boxing), but also to provide facilities for all in the community who wish to learn how to box and/or to use boxing training as a means of getting/keeping fit. It is ironic that the project, which has been so well supported by the public purse because it is seen as contributing significantly to the public good and to be in line with government policy (both national and local), should now be under threat of closure because of a tax liability.
It has been a real kick in the teeth to receive this VAT demand from HMRC that threatens to place our community-serving club into liquidation. Droitwich has boasted an amateur boxing club since 1977 and since then it has provided a much-valued community service in the town. We regularly have over 500 attendances a month – men and women, boys and girls from the ages of eight upwards – and have aspirations to grow and develop our building’s usage and membership.
After operating from a dilapidated facility for many years, it will be a real tragedy that we are forced into closure a little over 12 months since moving into our fantastic new home – one which our committee of volunteers has worked so tirelessly to obtain and is available to the benefit of local residents. We can only hope that common sense will prevail in the discussions now proposed between Peter Luff and HMRC.
Secretary, Droitwich ABA