United Kingdom
15 June 2011 - Golf clubs - non-members no longer handicapped by VAT on green fees?
In a recent test case (Bridport and West Dorset Golf Club Ltd), the First Tier Tribunal has decided that, contrary to HMRC's current position, green fees charged by not-for-profit golf clubs to non-members should be exempt from VAT, in the same way that members' subscriptions are exempt.
The reason for this decision is that the exemption for members' subscriptions is based on the general exemption for payments to not-for-profit sports clubs for participating in sporting activities. For these purposes, the Tribunal concluded, it does not matter whether a payment is made by way of a non-member's green fee or by a member's subscription. HMRC's current position is discriminatory and contravenes the Principal EC VAT Directive.
This is a potentially significant decision which could affect most if not all not-for-profit golf clubs.
In this appeal the company was seeking a refund of the output tax it has paid on green fees over many years – well beyond the three/four year capping provisions. It is understood that there are many other clubs which have made similar claims and are awaiting the outcome of this case. The Tribunal has confirmed that as the green fees are exempt from VAT there will be a restriction to input tax recovery, but for most clubs there should still be scope for a significant refund claim.
We do not yet know how HMRC will respond to this decision, but it seems probable that they will make an appeal to the Upper Tribunal and will refuse to pay any refunds which have been claimed by other clubs. The issues of the application of the capping provisions which limit claims to four years and the application of compound interest to the claim are to wait for decisions in other leading cases.
All not-for-profit golf clubs should review how much VAT they have accounted for on green fees and consider lodging a claim for a refund of output VAT overpaid. As with all potential refund claims it is important to make a proper claim at the earliest opportunity to maximise the period covered by the claim.
There may also be implications for other types of club which charge non-members a fee for occasional participaton, such as health clubs and gymns.
Please contact Steve James for further information or for assistance in making a repayment claim.