HMRC set to argue that VAT payments to golf clubs must be substantially reduced

Alistair Dunsmuir
By Alistair Dunsmuir January 15, 2015 11:58

HMRC is set to argue that the amount it is due to pay private members’ golf clubs back in overpaid VAT, which is thought to be millions of pounds, should be reduced by at least half, following the commissioning of a report that Golf Club Management has been given exclusive access to.

In 2013 the Court of Justice of the European Union (CJEU) ruled that VAT on green fees at private members’ golf clubs had been incorrectly applied for several years. This meant that scores of ‘not for profit’ clubs were able to claim the VAT back on green fees – believed to be worth several thousands of pounds to many of the venues involved.

royal courts of justice nick garrod

The Royal Courts of Justice. Image by Nick Garrod


After several months of legal wrangling and delays, a tribunal judge for the First Tier Tribunal Tax Chamber allowed HMRC to employ an American sports’ tax expert, Professor Stefan Szymanski, to study four golf clubs to see whether a process called unjust enrichment occurred. If it had, HMRC could feasibly not make the payments, but several tax advisers said the process had not taken place and the whole exercise was simply a ‘delaying tactic’.

Professor Szymanski studied four golf clubs, The Glen, The Wilmslow, The Berkshire and Bridport and West Dorset. The report states: ‘The evidence suggests a pass-through rate [when the tax is passed from the golf club to the customer] of at least 50% … Therefore the commissioners will submit that the appellants would be unjustly enriched to the extent that they are repaid more than 50% of the VAT charged on the green fees.’

“At The Berkshire around 67 percent of VAT on green fees would have been passed on to consumers,” said Professor Szymanski. “It’s at least 50 percent at Bridport and West Dorset, and approximately 50 percent at both The Wilmslow and The Glen.

“It is extremely unlikely that there was zero pass-through in any of the four cases.”

A golf club manager said that HMRC would use this argument to call for a reduced payment to golf clubs at a tax tribunal hearing at the Royal Court of Justice on January 22, 2015.

“HMRC are opening the bidding at the 50 percent mark,” he said.

He added that KPMG, which is representing many of the golf clubs looking to receive the rebate, will not take this latest development “lying down”.


Alistair Dunsmuir
By Alistair Dunsmuir January 15, 2015 11:58
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  1. AlanP January 28, 07:35

    I’m hearing similar things through the grapevine to what Golfowner has said. England Golf and KPMG can’t be too happy with the outcome or there would have been press releases everywhere and it has been very quiet on the news front since last weeks hearing.

    Apparently the Judge gave KPMG’s Amanda Brown a bit of a hard time, HMRC are ready to move forward but KPMG are not, so it’s now June before it’s heard again. How many comments and complaints have there been in the media talking about HMRC delaying paying money out from golf club secretaries and managers? Although I’m sure they will still be blaming HMRC even though the trial judge found clubs claiming for many things they should’t be.

    Reply to this comment
  2. Golfowner January 26, 15:23

    It’s been very quiet news wise regarding this article considering the case was in court last week. Turns out that HMRC are not delaying anything, KPMG are not quite as up to speed as they should be.

    What a surprise that the High Court Judge found that some of the claims where not quite as accurate as maybe they could have been regarding what was being claimed. A 5 day hearing is now scheduled for June if KPMG are ready in time.

    Reply to this comment
  3. Golf Treasurer January 19, 18:22

    Stuart – I think you need to know the facts before you speak. Most ‘ordinary’ golf clubs will pass on the VAT as lower subscriptions to members or as lower green fees to future visitors, thereby making golf more accessible to everyone. I know my facts as I am the Treasurer of one of these ‘ordinary’ clubs.

    Reply to this comment
    • GolfSec January 20, 16:06

      Golf Treasurer, just some advice. Do not lower your green fees. Your green fees are currently set at a level dictated by the market, and your club will have been consuming the VAT element of these fees, not passing it on the golfers. In lowering your green fees in the future, before this case is resolved, you would be leaving yourself in a position whereby HMRC could easily argue that you are not due the VAT back.

      Reply to this comment
  4. jon January 16, 18:36

    I think a lot of people that are either reading or commenting on all these articles don’t fully understand the story. They’ve almost certainly had their hopes raised by England Golf and what their no win no fee accountants/solicitors have promised them.

    The Berkshire GC will be in line for a massive payout as they’ve taken over £12.5 million in visitors fees since 1995 (which is available for all to see in their accounts via companies house). They’ve never paid a penny in tax on that £12.5 million, yet still claiming VAT back on it. Still the cheque should come in handy as I’m sure HMRC will be knocking on their door asking for backdated corporation tax over the period they are claiming it from and all the clubs who have submitted claims have opened HMRC’s eyes to the cashflow going through some clubs.

    I can’t help but think the greed/desperation of some clubs trying to get money back may just end up shooting themselves in the foot in the long run.

    Reply to this comment
    • GolfSec January 16, 23:39

      Jon, I cannot speak for The Berkshire, but I very much doubt that they have not paid any VAT on their green fees. VAT has, as proven by the ECJ ruling, been incorrectly paid on green fees, and HMRC have now stated that going forward it will not be due on said green fees. In claiming back the VAT The Berkshire will have had to have paid it in the first place. As for your suggestion on corporation tax, not a chance.

      I am constantly amazed by the vitriol and misinformation being spouted by those in and connected to the proprietary sector, with Vivien Saunders as their leader. But hey, why let facts and sound logic get in the way of claiming you are the ones missing out.

      Reply to this comment
      • jon January 18, 13:32

        Golf sec, It’s quite simple to check company accounts online. The Berkshire GC’s are quite thorough on incomings and outgoings. In the 2011 accounts i have in front of me they have declared £780,617 in TEMPORARY MEMBERSHIPS for the year. That’s not visitors or guests or green fees. That’s TEMPORARY MEMBERS and we all know the reason that clubs use the term TEMPORARY MEMBERS for green fees is because a TEMPORARY MEMBERSHIP is not taxable. On takings of over £2.5 million there is no mention in their accounts of any VAT or corporation tax paid.
        The Berkshire GC are not alone in this

        Reply to this comment
        • GolfSec January 19, 16:31

          Jon, if you have The Berkshire’s account in front of you, and they have not paid any VAT, then they will not be able to claim back any VAT. It is as simple as that. While I disagree with having declared their green fee payers as temporary members, to an extent it has served them well as they are not having to suffer HMRC’s delaying tactics and poor understanding of the situation as they already have their money.

          With regards to corporation tax, you misunderstand. They will not have paid corporation tax, you are absolutely correct. However, to claim that HMRC will now look to come after non-profit making golf clubs for backdated corporation tax is completely pie in the sky, and just another thing that proprietary golf club owners are looking at using to penalise them.

          Reply to this comment
  5. Name January 16, 17:18

    Stuart – which part of HMRC do you work for. Your statement is completely wrong! The visiting golfer paid a fee to play and had no idea and no interest in whether it was VAT inclusive. The cost of the tax was borne solely by the clubs and they should rightly get it back.

    Reply to this comment
    • Mike February 25, 09:52

      Name – All VAT is paid for by the consumer. It is a consumption tax borne by the consumer of those goods and services.
      There is a cost to the seller, however that cost has nothing to do with the consumer and is expressly related to cost incurred in collection and accounting of that tax which is passed on to the HMRC.
      Stuart is not ‘ completely wrong ‘. The cash paid for the VAT has come out of the consumers pocket not the golf clubs.
      Anyone who runs a business collects VAT for and on behalf of the HMRC. There is a cost to that but that is part of running a business and in no way is the responsibility of the consumer.

      Reply to this comment
  6. Stuart January 16, 11:32

    This VAT belongs to visiting golfers and not the Golf Clubs themselves. I think it very unlikely those visiting golfers will receive a refund so hopefully HMRC will win their case.

    Reply to this comment
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