HMRC finally accepts VAT ruling – but says it will restrict payments to members’ golf clubs

Alistair Dunsmuir
By Alistair Dunsmuir June 27, 2014 10:18

HM Revenue and Customs (HMRC) has finally accepted a 2013 European Union ruling that green fees at private members’ golf clubs must be exempt from VAT and has said that it will pass new legislation on it by the end of this year.

However, the tax authority has said that it intends to restrict repayments to golf clubs unless they pass the money they receive back to the golfers who bought the green fees in the first place. It has also failed to give any idea of a timeline for when clubs will receive money if they choose not to pass the refunds on.

42-43 Clubhouse1

Bridport & West Dorset Golf Club

The tax authority, which has been widely criticised for a lack of response to the ruling, has said it will split claims for repayments for overpaid VAT into two categories.

The first category will be golf clubs that will pass on the refund they are due to the visiting golfers who paid green fees at their clubs, which could be as few as zero.

“HMRC will meet eligible claims under the terms of sections 9 and 10 of Notice 700/45 providing that clubs demonstrate that they have made arrangements to reimburse the VAT to non-members who actually paid it, and make a legally binding commitment to do so in a timely manner,” said a spokesman.

The second category will be for golf clubs that do not intend to pass their repayments on to golfers. Hundreds of golf clubs, hoping to claim hundreds of millions of pounds of money in overpaid VAT from the taxpayer, fall into this category. Here, HMRC has given no indication when they will get the money.

“HMRC are examining the scope for restricting repayments to clubs not making arrangements to reimburse the paying non-members to avoid the unjust enrichment of members’ clubs. Further advice will be issued on these claims after a conclusion has been reached on this point,” said the spokesman.

Many proprietary clubs have called for private members’ clubs to pass the refund on to the golfers who paid the green fees, although most private members’ clubs said they took the VAT hit rather than the golfers did, anyway.

HMRC’s announcement comes just days after one body representing proprietary golf clubs made an application to have the EU ruling thrown out.

The manager of one private members’ club said he was disappointed with ‘HMRC’s latest delaying tactics’, but was pleased that the authority had finally accepted the EU ruling – nearly six months after its Irish counterpart did.

In a statement on its website, the authority says: ‘HMRC accepts that supplies of sporting services to both members and non-members of non-profit making sports’ clubs qualify to be treated as exempt from VAT, provided that the services are closely linked and essential to sport and are made to persons taking part in sport.’


Alistair Dunsmuir
By Alistair Dunsmuir June 27, 2014 10:18
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  1. Samantha Nelson June 27, 10:43

    What an absolute joke! We’ve waited six months and this is the best HMRC can do.

    Looks to me like they’re just trying to delay this until the next parliament so they can blame everything on the previous administration.

    Reply to this comment
    • Phil June 29, 09:27

      Samantha ,you seem to have totally missed the point. You (your club) is not entitled to receive the VAT that your visiting golfers (not members for the day) and societies have paid you to pass on to HMRC.Neither are you able to claim that the VAT paid by corporate customers should be returned to you. That will already have been reclaimed by the corporate cutomer.
      Some membersclubs are saying that their clubs absorbed or paid the vat for the visitor, did they also decline to claim the VAT refund on purchases of Alcohol and new machinery? I very much doubt it.
      The EU staed that vat on greenfees for members clubs should no longer apply, You are very lucky to get that . As your club will undoubtedly not reduce green fees you are now 20% better off. You will not be able to reclaim the vat on machinery chemicals etc but I would not expect that your club spends all its income on this anyway.I know my business would be better off under the deal you have been offered. Don’t be greedy.Pay the going rate for golf drinks and food , instead of esxpecting the taxpayer to subsidise your “£private Club”£
      Hopefully AGCO will now concentrate on the fraud being perpetrated through CASC. Trying to screw the last drop of cash out of the system has exposed to the rest of the golfing world what a scam has been going on.

      Reply to this comment
  2. Richard June 27, 14:46

    Well done HMRC

    Reply to this comment
  3. Trentparkgolf June 27, 16:21

    Delighted to see HMRC are making it as difficult as possible for these greedy tax payer subsidised so called private clubs to get any money back. The EU decision was a disgrace and HMRC know it. They are clearly also taking the unjust enrichment argument put forward by AGCO seriously. Well done Vivian Saunders the Golf’s Iron Lady and the hero of many proprietary owners ! The next step is to persuade HMRC to remove the VAT exemptions entirely from Golf, clamp down on the appalling abuses of CASC and finally start collecting some meaningful Corp Tax from the very profitable visitor income at private clubs.

    Reply to this comment
  4. John June 28, 04:02

    I wonder how many clubs will now lay their full accounts out in front of HMRC to try to claim some of this money back?

    As stated by HMRC in their decision trading income from non members is taxable and liable to corporation tax.

    Let’s see how this goes

    I’d say someone has opened a big can of worms for ‘private’ members clubs

    Reply to this comment
  5. John Pointon (@jpointon) June 28, 12:30

    HMRC finally accepts VAT ruling – but says it will restrict payments to members’ golf clubs

    Reply to this comment
  6. Peter June 30, 05:06

    HMRC have been criticised for not making a response to the ruling but at least they have come up with the right response, only paying out to clubs that are going to pay monies back to the golfers that actually paid them.
    England Golf and KPMG have been frighteningly quiet on this matter since HMRC issued their brief on it. I would have thought that the 2 driving forces behind this would have had time to make a statement on it by now.

    Reply to this comment
  7. @TaxAssist_CM21 July 1, 16:35

    some golfers will be pleased!

    Reply to this comment
  8. Golfclub Managers (@GolfclubM) July 1, 16:49

    HMRC finally accepts VAT ruling – but says it will restrict payments to members’ golf clubs via @gcm_mag

    Reply to this comment
  9. Stuart July 3, 13:03

    Good on HMRC why do members of Private Clubs expect to recover this VAT that was never intended for them. Furthermore if it had been treated as exempt income in the first place their recovery of input VAT would have been lower.

    Just for the record I am a member of a private club and still feel my Club should not recover this VAT.

    Reply to this comment
    • mike July 3, 13:16


      Just for the record

      All the calculations that WILL be paid out have taken into account that the input tax was lower.

      Reply to this comment
  10. mike July 3, 13:13

    To all our Propriety friends.

    Lets be absolutely clear.

    No matter how bitter you are that private members clubs will receive, and believe me it is only a matter of time before payments will be made to all private golf clubs irrespectively whether they pay the visitor back or not, the fact is that this has been decided by law.

    After all your case, ie; the propriety case that was taken forward by one of the leading barristers in the country, was ruled not in favour.

    I have worked for both, private & propriety clubs and in my opinion there are advantages on both sides.

    On a final note, if some propriety clubs think HMRC will not pay out! Think again because a precedent has already been set and Bridport Golf Club has been paid out in full. Therefore unjust enrichment can’t be used anymore!!

    Reply to this comment
    • Peter July 4, 10:49

      Bridport GC may well have already been paid by HMRC but I think there may well be a long way to go yet. Why do you think KPMG have been so quiet on the matter?

      Reply to this comment
  11. @GTSGolfScotland July 3, 14:09

    Green fees at private members’ golf clubs must be exempt from VAT

    Reply to this comment
  12. Karl July 3, 16:25

    I organised a huge outing to a Private Members Club about 3 years ago. 50 of us paid around £2000 of green fees. I guess me as the lead name of the group will be offered £400 back should the club in question go down the route HMRC are setting out. I cannot remember who all attended and have no record either so would it be ‘unjust’ of me to pocket £392 extra?

    Reply to this comment
  13. Hirsel Golf Club (@HirselGolfClub) July 3, 16:39

    HMRC are examining the scope for restricting repayments to members’ golf clubs

    Reply to this comment
  14. Vivien Saunders July 4, 11:15

    Let’s please be clear on this. The issue of whether or not a corporate or society day was VAT exempt is huge. Members’ clubs are trying to rely on the Canterbury Hockey Club Case which said that supplies of sport to “groups of individuals” such as a hockey club was exempt whether or not the club was incorporated or unincorporated. There is therefore a huge difference in whether the society was supplied to a group of golfers or HSBC. In many cases the host club will not have known the status of the society. Rest assured that the questions raised by AGCO to HMRC which could result in a VAT tribunal are crucial. If HMRC and Europe thinks people playing golf as part of a corporate day hosted by HSBC should result in VAT exempt golf then the members of proprietary clubs should also get VAT exempt golf. That is why AGCO has a case in front of Europe. That is why AGCO has raised the issue of the status of golf societies and corporate days. It isn’t about being spiteful about members’ clubs. It is about ascertaining the status of golf supplied to and by companies. The proprietary clubs did not lose any VAT case. The Chipping Sodbury GC judges made a marvellous finding of fact that there is distortion between members’ clubs and proprietary clubs. That was our aim. That is now going forward to Europe. Chipping Sodbury also left the issue of VAT on affiliation fees open and that is with a VAT tribunal waiting for HMRC to file their defence by August 5th. The issue is not really the affiliation fees but the distortion of the whole liability issue. It is complex. AGCO has three serious cases with the European Commission and the pending VAT tribunal. We have other questions before HMRC following the Bridport judgment which we are used to combat the VAT distortion from which we suffer. 20% VAT means we send 1/6 of our golf takings to the VAT man. 5% would mean the figure is reduced to 1/21. Nothing adversely affects members’ clubs. On liquor licenses, most members’ clubs have Club Premises Certificates and shouldn’t serve alcohol to societies! Still that’s just simple law breaking>

    Reply to this comment
  15. William July 5, 09:38

    If Bridport has been paid out in full its yet another faux-pas by HMRC. If Viv Saunders had been employed by HMRC they would have won the case and would not be in the mess they now find themselves. Yet another own goal by the totally incompetent HMRC who clearly know nothing about the golf business. Now is the time for HMRC to level the playing field of taxation in golf and sport in general.

    Reply to this comment
    • Vivien Saunders July 5, 12:39

      William – yes thanks for your praise. AGCO offered to assist HMRC in 2011. Sadly neither HMRC, nor the solicitor or barrister representing them, nor either of the judges, knew enough about golf to realise that KPMG and Bridport had failed to disclose that much the income classed as green fees was actually from corporate days. HSBC (the Bank) is not a group of individuals. HSBC (Higher Staughton Bowls Club) might be. HMRC has its own golf society RCSL which isn’t Roger, Charles, Steve and Larry but Revenue and Customs Sports League. Competitors are paid for by HMRC and paid at work, It is the uncertainty of corporate days and societies that is to be resolved. We would love HMRC to say a golf day to HSBC is VAT exempt and they could presumably pass on the cost VAT exempt to their punters. That would break the back of the VAT distortion argument and mean members at proprietary clubs would get VAT exempt golf. On the other hand if they say these days are not VAT exempt it throws all the claims annexed into Bridport into question. HMRC, through Bridport, has now realised the enormous income from green fees at members’ clubs. Often these have just been swept into the accounts without any attempt to declare the trading to the taxman. CT will be payable on the income from VAT refunds. There are technically no expenses to allow against this income. it is separate from set off of input and output tax. Expenses allowed against green fees are based on rounds of golf and the additional income has no expenses. KPMG and EG urged clubs to make these claims. KPMG didn’t use Clitheroe GC to front the case. KPMG are Clitheroe’s accountants. Clitheroe has never paid tax on green fees and is typical. Bridport was caught for CT on green fees in 1992 – they say so in accounts. And that is why they were chosen to front the case. Even Bridport has corporate days like Agustawestland Ltd (helicopters). KPMG and Bridport just hid this from the judge. The case isn’t over for members’ clubs and actually has huge potential advantage for proprietary clubs. It helps the AGCO case in front of the European Commission and is why AGCO is fundraising to get counsel’s opinion from Melanie Hall QC to add weight to our case with the EC. EG and KPMG have gone very quiet on this.

      Reply to this comment
  16. Stanton4 May 16, 09:25

    Very good Viv, but you are being a little naughty on the RCSL, it is a society funded by member’s subscriptions which may in turn encourage and subsidise members participation in a range of sports which includes golf.
    It has nothing to do with HMRC as such.

    Reply to this comment
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