" has been signed by more than 12,000 people, including actor Colin Firth and television presenter Dermot O'Leary.
James Kewin, deputy chief executive of the SFCA, said that although colleges that created facilities exclusively for the use of students should theoretically be exempt from paying VAT, the legal process was "torturous".
"The definition of what is `business use' can tip the balance, and sporting activities can be considered as [falling into this category] if, say, there is a charge to hire a sports hall," he added. "If more than 5 per cent of activity is considered `business use', you get hit for VAT at 20 per cent for the whole building."
Maurice Patterson, vice-principal for finance and resources at Thomas Rotherham College in South Yorkshire, said his college was facing a pound;100,000 VAT bill for the all-weather hockey pitch it was hoping to build. "If the pitch was built 100m south in the adjoining school grounds, they would not have to pay any VAT," he added.
But the general decline in participation was the main concern for colleges, Mr Kingwell said, with wider implications than simply the health of learners.
"Sport for its own sake has benefits for health and social skills, but students who take part in sport at college have better rates of employment on leaving, and actually go on to earn more as well," he added. "This comes from the transferable skills of sport: coping with setbacks, setting goals - things which are used in the workplace once they take on gainful employment."
Sport can also be used as a strategy to help colleges engage and retain young people who are not in education, employment or training (Neet), according to Paul Cox, head of sport at Worthing College. "There are opportunities for those students who didn't have the best experience at school to get back into the education pathway through sport," he said.
And the wider financial difficulties in the FE sector should not deter colleges from investing in sport, Mr Kingwell added.
"I don't think it's an eitheror choice," he said. "The skills agenda is the prime focus for colleges; that's what they're there for. But if we just put students through to get them qualified and come out with qualifications, I think we're missing the opportunity to add value to that college experience and the calibre of the learner."
`Sport can have a massive impact'
Sport is an integral part of the recruitment and retention strategy at Worthing College in West Sussex, where one in five students take sport-related courses. The college offers level 2-4 qualifications, alongside apprenticeships run in partnership with local employers.
Paul Cox, Worthing's head of sport and a college director, says sport is a key part of the "whole-college strategy". In a recent survey, 62 per cent of Worthing's learners said sport was instrumental in their decision to stay on at college, while 53 per cent said they were participating in more physical activity now than before they enrolled.
But, perhaps surprisingly given this success, Worthing College does not have its own sports hall. "The Department for Education and the Department for Business, Innovation and Skills have not highlighted sport as a major priority for funding," Mr Cox says. "FE is so often overlooked for sport. If it's invested in, and with a strategy that's joined-up, it can have a massive impact on public health and the habits of young people."