HMRC agrees to pay golf clubs over VAT claims

Alistair Dunsmuir
By Alistair Dunsmuir November 26, 2015 11:02

HMRC has agreed to pay private members’ golf clubs VAT claims over their green fees that could amount to millions of pounds. However, accountancy firm KPMG is advising clubs that if they cannot confirm that the claims comply with the latest HMRC guidance, they should do nothing for now.

KPMG VAT director Paul Stewart

KPMG VAT director Paul Stewart

The Court of Justice of the European Union (CJEU) ruled in December 2013 that, in a case taken by KPMG, green fees at private members’ golf clubs should have been exempt from VAT.

This meant that scores of ‘private members’ clubs’ were able to reclaim VAT previously declared on green fees. HMRC subsequently announced that they were going to invoke a defence of unjust enrichment amounting to 50 or 67 percent of the VAT overpaid on green fees. However, until recently, HMRC had not decided on how to allocate private members’ clubs to the 50 and 67 percent unjust enrichment categories.

A First Tier Tribunal hearing took place in June in respect of unjust enrichment and a hearing took place in July in relation to several technical matters, with the decisions for both expected soon. The appeals were heard in relation to three lead appellants represented by KPMG.

Earlier this month HM Revenue & Customs released Brief 19 (2015) stating that ‘although the question of unjust enrichment is still before the courts, HMRC has decided to pay or credit, subject to conditions, 50 or 33 percent (depending on certain criteria being met including the amount of green fees charged in the claim period) of the value of valid claims ahead of any court decision.’

However, KPMG, which is representing a significant number of private members’ clubs on this case, has advised the clubs it represents that they do not propose to adjust claims until the tribunal decisions are released. “HMRC have confirmed that the reason for the timing of the publication of the brief is that they have finally made a decision on how clubs should be allocated to the 50 and 67 percent unjust enrichment categories. This is based on whether green fees are less than, or more than, £100 per person per round,” said Paul Stewart, a VAT director at KPMG.

“HMRC’s position is that even where a corporate body simply pays for the green fees only, then the income is to be treated as a corporate day. KPMG argued that VAT should only be accounted for on corporate day packages.

“Our view therefore is that at the present time the vast majority of clubs, if not all, will not be able to file a compliant claim without considerable time investment which, if the First Tier Tribunal finds in the clubs’ favour, will have been unnecessary. We anticipate a judgment, at least on these issues, before Christmas and on that basis recommend that we await that judgment before seeking to adjust the claims. We will, however, need to adjust claims in relation to the green fee element of corporate day packages and will be requesting information separately in relation to this in the near future.”

The news comes as KPMG’s Paul Stewart detailed the case history to a number of golf club managers at the GCMA’s recent conference and added that HMRC will need to ensure that resources are in place to process clubs’ claims in 2016. He also said that KPMG was in dialogue with HMRC and HM Treasury on behalf of the UK Golf Owners Association (UKGCOA) to explore how the VAT burden for proprietary golf clubs can be reduced.


Alistair Dunsmuir
By Alistair Dunsmuir November 26, 2015 11:02
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