Membership fees and multiple supplies

The supply of benefits as part of a “membership” in return for payment of an annual fee did not amount to a single taxable supply of membership where the typical member was primarily interested in the physical items received as a member rather than the membership itself.

The First Tier Tribunal has held that a variety of benefits provided to consumers as part of their “membership” of the Harley Owners Club in return for payment of an annual fee did not amount to a single taxable supply of membership: Harley-Davidson Europe Ltd v HMRC [2017} UKFTT 873. The tribunal considered that the better view was that the recipients received multiple supplies of the various benefits of membership and that the consideration should be apportioned accordingly.

The decision contains a useful review of the principles surrounding the application of the single/multiple supply rules and their application to a situation involving membership arrangements.


The Harley Owners Club (HOG) was not a true club or distinct entity. HOG was instead provided by the marketing unit of Harley-Davidson Europe Ltd (HDE). Owners of Harley-Davidson motorcycles were invited to be members of the club run by HDE in return for a payment of (generally) £55 per annum. The club was open to owners from Europe and the Middle East and Africa. In return for the payment, members received a number of benefits. These included: a quarterly magazine; Harley-Davidson patches and pins; a Harley-Davidson touring map; a membership card and guide; details of Harley-Davidson events; the opportunity to join a local Harley-Davidson “chapter” organised by local dealerships where owners meet for activities; access to the website; and a range of other so-called benefits included discounts at certain retailers/insurers and access to other paid for activities.

HDE initially accounted for VAT on the membership fees as taxable supplies of membership. However, in 2014 HDE made a reclaim on the basis that it had accounted for output VAT on the wrong basis, arguing that it made multiple supplies in return for the annual membership. It contended that its supplies to non-EU members were zero-rated (goods) or outside the scope (services) and that its supplies to EU members should be apportioned between zero-rated printed matter and other standard rated items. HMRC rejected these claims on the basis that the VAT had originally been accounted for on the correct basis and that HDE made standard rated supplies of membership.


The decision of the First Tier Tribunal contains a useful summary of the recent case law on single/multiple supply principles and their application to membership situations.

The tribunal started from the premise that supplies should normally be regarded as distinct and independent, unless it would be artificial to split them. Cases where it would be artificial to split supplies include where one is ancillary to the other as well as where there is a single indivisible supply from an economic perspective despite there being no principal element.

HMRC contended that the supply in this case was one of “membership”. The benefits, such as the magazine, badges, access to the local Chapters etc were, in essence, simply ancillary to the status of membership. HMRC relied on the decision in Tumble Tots where a parent paid a membership fee essentially for access to classes for their children, in which it was held that the supply was one of taxable membership even though the parent received a number of items (such as a magazine, T-shirt, DVD, insurance). That case also highlighted the fact that there could be a supply of a “membership”, even where there is no membership club in the traditional sense but simply a contractual arrangement between provider and customer.

HDE, in contrast, relied on the AA case, in which the courts held that payment of a membership fee to the AA (an unincorporated association) was not simply made for the “bare husk of membership”, but rather for the individual benefits of handbook, magazine and breakdown services.

The tribunal, on the facts, rejected HMRC’s argument. In Tumble Tots, the parent was mainly seeking access to the classes for their children. The extras were not what the parent was seeking to acquire by paying the fee. They were entirely peripheral and not an end in themselves for the parent. In contrast, the tribunal was not persuaded that the typical HOG member was mainly seeking to acquire the status of membership of HOG, as opposed to the individual benefits. In particular, the evidence was that the magazine, patches and pins in particular were all valued items. The key affiliation demonstrated by the typical member was with the Harley-Davidson brand rather than with HOG itself and the physical items received as members of HOG went to aiding that wider affiliation rather than the membership of HOG itself. These items were not merely a better means of enjoying their membership of HOG, but were enjoyed in themselves and as part of the broader enjoyment of the motorbikes.

The tribunal noted that the single price and the fact that there was no ability to choose which elements were supplied were both points in favour of HMRC’s analysis. However, they were not determinative. Equally, there were elements of the supply (such as the access to the local Chapters and discounts) that were similar to the status of a membership (by providing access to benefits). Equally, membership of HOG itself might be seen as conferring some cachet in itself in a way that was absent in the AA case.

However, overall, the tribunal considered that the individual benefits provided (particularly the magazine and badges/pins) were too significant to allow the supply to be characterised simply as a single supply of membership. Many of them might be described as designed to allow better enjoyment of Harley-Davidson bikes, but not better enjoyment of membership of HOG itself.


The decision of the tribunal highlights the individual nature of cases concerning the single/multiple supply question. Whilst the general principles to apply are relatively clear, the application to the facts can involve a considerable degree of subjectivity.

In relation to membership benefits, it seems clear that the distinction to draw is between a payment for membership which carries some benefits in and of itself beyond the mere items received by members, for example access to particular facilities. Where the individual membership benefits themselves are significant and enjoyed in themselves, there is more likely to be a supply of those benefits separately (which may then still amount to a single supply if any one of them is predominant and the rest ancillary).

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