Imagine, if you will, that there exists a group of people who like nothing more than messing about in boats.
They long ago started calling themselves a club, and are non-profit making, run purely for the benefit of the members, and without any outside commercial influences. The club has some assets (boats, oars, life jackets) but most members use their own. The club insures its members for club events.
From time to time, in order to mess about in boats, the club rents a lakeside house, at which club members come and stay for a weekend, to mess about in boats. The rental is paid for by charging the attending members fees, both a "house rental" part and a "messing about" part (so those who stay inside and do not go on the water pay less). Any surplus is not a trading profit and is ploughed back into the club.
The club members have never really thought about VAT, and try hard not to, hoping that the sporting exemption applies (mumble mumble Kennemer Golf & Country Club), and that the accommodation aspect is also exempt (mumble mumble National Association of Local Government Officers v Watkins ). For the purposes of this question, assume they are right, or at least arguably right.
Here's the question: club members have traditionally brought and cooked their own food over the weekend. Now, one member (a skilled cook) is proposing to cook for the entire membership for the entire weekend, provided the club reimburses them for the raw materials. Three hot meals a day is very tempting, but one annoying member pipes up "Wouldn't that count as catering? And be VATable at the standard rate?"
The members go quiet. 3 hot meals a day, weighed against the faff of having to work out whether or not they'd have to pay VAT and come to HMRC's attention.
Is the annoying member right? Would a member catering for the weekend and the club paying for it be a VATable thing?