Clubs unhappy with HMRC’s ‘delaying tactics’ re VAT rebate

Alistair Dunsmuir
By Alistair Dunsmuir May 20, 2014 13:48

Clubs unhappy with HMRC’s ‘delaying tactics’ re VAT rebate

A number of private members’ golf clubs have expressed disappointment that HMRC has so far not processed claims for a VAT rebate on green fees following an historic European Union ruling last year.


A number of golf clubs have criticised HMRC over perceived ‘delaying tactics’ regarding a VAT rebate on green fees

HMRC has asked the tax tribunal that all appeals that stood behind the original case involving Bridport and West Dorset Golf Club be put on hold until July 18 to give it time to decide whether it will argue that clubs can not receive payments as a process called unjust enrichment may occur.

The development comes as KPMG, the accountancy firm that represented Bridport and West Dorset Golf Club in its litigation and is representing hundreds of private members’ golf clubs in their action against HMRC, has recommended that golf clubs treat green fees as being VAT exempt from the start of the current VAT return period.

Last year the European Union ruled that green fees at private members’ golf clubs must be exempt from VAT, which has meant that hundreds of clubs are hoping to claim back millions of pounds from the government. This ruling has also frustrated proprietary golf clubs, as the decision does not apply to them.

Over 1,000 private members’ golf clubs, representing more than two-thirds of all the private members’ golf clubs in the UK, have issued a claim to HMRC since the ruling.

At the end of April HMRC made its application for the process to be put on hold.

“We are discussing this with HMRC and have voiced our concerns at the length of delay,” said Paul Stewart, director of Indirect Tax at KPMG.

“We expect to have further contact with HMRC in early June about this and will have an update then.

“Regarding unjust enrichment, HMRC would need to show that a golf club’s pricing structure passed the economic burden of the VAT on to customers,” he said. “We expect clubs to continue to charge the same price for their green fees, which supports our view that fees are generally set by reference to the market regardless of the VAT liability, making the unjust enrichment argument difficult for HMRC to pursue.

money jd mack

More than two thirds of UK private members’ clubs have now made a VAT claim, with all hoping for a windfall. Image by JD Mack

“We have recommended to our private members’ golf club clients that they treat any green fees received as exempt with effect from the start of the current VAT return period.”

Several golf club managers have contacted Golf Club Management to express anger at what they perceive to be ‘delaying tactics’ by HMRC. They have all asked to be anonymous.

“There must be some serious concerns as to the validity of the unjust enrichment defence if HMRC need more than two months to consider and be advised on it,” said one.

His argument echoes the comments of VAT expert Adrian Houstoun, who has also been critical of HMRC.

“When HMRC won their argument earlier in the legal process, they issued a brief denying favourable VAT treatment roughly three weeks later; however, they have not yet issued a new brief,” he said.

“Further, most businesses without professional representation would commence their enquiries about the VAT status of their transactions by consulting HMRC, which still states on its website that visitor green fees are standard rated!”

HMRC’s position is in contrast to the Irish government’s.

This January the Revenue Commissioners in Ireland said it ‘accepts’ the EU ruling, is amending legislation and will make refunds to golf clubs subject to consideration of unjust enrichment, which includes the extent to which the overpaid amount was for practical purposes passed on to visitors in the price charged.


Alistair Dunsmuir
By Alistair Dunsmuir May 20, 2014 13:48
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  1. PGA member May 20, 22:35

    UKGCOA and AGCO, on behalf of the proprietary owned golf clubs have petitioned The Treasury to halt this scandalous addition to the distortion in taxation faced by the proprietary sector. We have the support of many MP’s. We sincerely hope that the Unjust Enrichment argument will be won and that this VAT refund will never be made. Setting aside our opinions on the devastating Bridport decision, the golf clubs are not entitled to the VAT refund. It would be for the people who payed the VAT to claim it. Those green fee payers are almost certainly untraceable.

    We would appreciate a more balanced approach from you in respect of the severe distortion in taxation problems the proprietary sector is facing.

    Reply to this comment
  2. Managing Director of proprietary golf club May 21, 10:34

    Thanks for pointing out the greed of the “non profit ” making Members Clubs, but could you also show the plight of us Proprietary Clubs.

    The argument that the accountants for these members clubs are distorting the facts about how they charged VAT. They claim that as they are not dropping the greenfee price they “absorbed” the Vat part of the green fee and their prices were based on market forces.
    Members clubs were here long before proprietary clubs who set their prices in line with the members clubs and obviously ,as did everyone paid the appropriate rate of Vat. Now members clubs have been given a 20 year retrospective gift of VAT and a 20% advantage over us.
    This does not even take into account the fact that a large amount of clubs such as Birchwood in Warrington only pay 20% of their business rate through CASC membership (Community Aided Sports Club) despite having three rooms dedicated to private functions and weddings.

    How can they be a not for profit club? their bar has been open to the public since it opened. Unlawful enrichment exists and is supported by the robber barons who govern us.

    Reply to this comment
  3. GCMA Member May 21, 12:20

    Proprietary golf clubs are profit making organisations, and their main interest is exactly that, making a profit and taking that money out of the golf club, rather than re-investing it. Private Members’ Clubs are, on the other hand, non-profit making organisations. Any surplus is re-invested in the golf club for the benefit of the members and visitors who would like to enjoy the facilities. If Vivien Saunders and the like were really that interested in golf and golf clubs, and looking after members, rather than making a profit and filling their own coffers, then they could quite easily enjoy the same benefits as a private members’ club. How so? By becoming a private members’ club. Unfortunately, this is never likely to happen, as they would lose out on the money making aspect of owning a golf club.

    As for the comments by the so-called Managing Director of a proprietary golf club; I cannot comment on Birchwood as I do not know the club, however, I highly doubt that they run a bar which is open to the public, although if true then I would stand beside you and criticise them for doing so. Nevertheless, you claim that private members’ clubs will be receiving a 20% advantage over you. Now, the reason I used so-called stems from this utterly erroneous statement. You, as a Managing Director, should know that the VAT which you pay out on green fees could be partially reclaimed against course purchases under the previous rules. Now, given that green fees are entirely VAT exempt, there will be no VAT that can be claimed out. In other words, 20% advantage is somewhat overstating the situation.

    At the end of the day, I will return to my earlier point. If proprietary golf club were truly run for golfers, and no about making money, then they would become private members’ clubs. It is a simple solution.

    Reply to this comment
  4. Stuart May 22, 12:02

    I think it is totally wrong that these clubs should be entitled to a refund for the following reasons:
    (1) The VAT does belong to the person paying the green fee not the Club. When deciding upon a level of green fee the Clubs would have taken into account the VAT element.
    (2) If the green fees had been treated as exempt the level of input tax recovery would have been lower under the partial exemption rules.

    It is for the above reasons that the refund should not be paid

    Reply to this comment
  5. Alan Key May 22, 13:26

    Boo-hoo! Those poor member owned clubs. Not only have they been ‘forced to pay VAT’ on green fees for 20 years (which they actually haven’t, the customer has), but now there’s a delay in their nice big windfall!

    How will they cope? They may even have to dip into their VAT-exempt membership fees (which give them a 20% income advantage over proprietary-owned clubs) to keep theirs clubs running due to all this profit they’re ‘not making’.

    The whole thing is an absolute shambles. I really wish some of the big proprietary organisations such as Marriot, De Vere, Q Hotels would get on the back of this and take HMRC to the cleaners. The only reason proprietary clubs haven’t been able to make progress with this is because we all can’t afford to chip in £5,000 each to pay for a decent barrister. If the big boys got on board (I’m sure it would be worth it for them, I bet they would be able to claim back £*00,000’s) I’m pretty sure we could this ridiculous distortion once and for all.

    Reply to this comment
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