AGCO meets with top treasury official

Seamus Rotherick
By Seamus Rotherick July 12, 2012 10:09

Three campaigners for a reformed tax regime in British golf have met with a senior treasury official to discuss the way forward.

Vivien Saunders, chair of the Association of Golf Course Owners (AGCO), Andrew Sutcliffe, vice chairman of AGCO and Jeremy Sturgess, owner of Trent Park Golf Club, discussed tax in golf with David Gauke MP, exchequer secretary to the treasury.

AGCO has been campaigning for its members, owners of proprietary golf clubs, to be subject to the same taxation regulations as private members’ golf clubs, which can charge reduced VAT on membership subscriptions.

Treasury officials reviewed a report that AGCO produced, Fair Tax in Sport, which detailed the issue.

“The VAT distortion has crippled many proprietary clubs for 20 years,” said Saunders.

“I flagged up the absurdity of member-owned clubs, with their huge trading activities, being classified as non-profit making. We also made the point that these clubs are failing to pay corporation tax on their trading income, because they hide it under ‘temporary memberships’. The Fair Tax in Sport report also raised the issue of the nonsense of clubs registering as Community Amateur Sports Clubs [CASC], which saves members’ clubs £30,000 or so a year in business rates.

“We repeatedly made the point that something must be done urgently or other good proprietary clubs will go the way of The Norfolk – a fantastic golf venue returned to farmland.”

This is the latest meeting that AGCO has had with a senior MP this year – representatives have met several law makers in the last few months, including foreign secretary William Hague and former defence secretary Dr Liam Fox.

The meeting comes just five weeks after Vivien Saunders’ attendance at the tax tribunal first tier case between Chipping Sodbury Golf Club and Her Majesty’s Revenue and Customs (HMRC), which could reduce the VAT all sports’ clubs pay on their members’ subscriptions.

Keith Lloyd, chief executive of the Golf Club Managers’ Association (GCMA), who also attended the hearing, explained the importance of that case.

“It is the lead case where Chipping Sodbury, the appellant, is seeking a claim for overpaid VAT on membership subscriptions paid between 1973 and 1989,” he said.

“The claim is made on the basis of apportionment, that is that a member’s golf subscription represents a ‘bundle’ of services of which some are exempt from incurring VAT, and some are deemed outside the scope.

“It is believed that as many as 1,200 other UK golf clubs may have submitted similar claims, in addition to which a further 500 non-golfing but equally non-profit making sporting bodies have similar claims dependant on the outcome of this case.

“The scale of importance of this case is therefore enormous, as should this case be found to be in favour of the appellant, claims for the 1,700 cases ‘stacked’ behind the outcome would also be valid. With interest automatically being an entitlement in addition to the actual claims, estimates for the cumulative refund total vary from £150 million to possibly as much as £400 million.

“Costs for this hearing were well in excess of £70,000 of which a significant percentage had been funded by a sterling effort on the part of Vivien Saunders to raise contributions from clubs and individuals or associations from the proprietary sector. It is worth reminding all concerned that in getting the case thus far, England Golf also underwrote £100,000 of support for previous legal costs, not to mention, of course, previous various contributions from the many individual clubs with vested interests in the case.”

Vivien Saunders also reflected on the hearing.

“The case should establish that there is distortion, but whether the judges will go so far as to say the distortion is illegal is another matter,” she said.

“It may result in the return of some VAT and for members’ clubs even going back to 1977. The main issue, we believe, for the treasury is that they are probably anticipating losing the Bridport and West Dorset Golf Club case [which is due to be decided later this month]. That would result in member-owned clubs clawing back some £300 million in VAT on green fees going back to 1990 and being VAT exempt for green fees in the future.

“I had a very interesting email from a proprietary golf club owner, who is a professional golfer, who recovered VAT on his golf teaching. But HMRC then set on him and demanded to re-open his accounts and recovered income tax based on the fact that his earnings had increased because of the return of the VAT.

“Our hope, quite frankly, is that if the member-owned clubs claw back VAT on green fees from 1990, then HMRC re-opens their accounts and looks at the corporation tax on those green fees! Corporation tax is payable on visitors’ fees, as opposed to members’ guests. Funnily enough we can only find one English club paying corporation tax on those green fees – Bridport and West Dorset! That issue was also on our agenda with the treasury.”

Seamus Rotherick
By Seamus Rotherick July 12, 2012 10:09
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  1. John July 16, 05:22

    Not true at all Mork, the days of outdated private members clubs may be gone, very few can survive of their membership fees alone. If they didn’t act commercially to subsidise their memberships, proprietary golf would do just fine.

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  2. Mork July 14, 17:26

    Why everybody anonymous? The days of making money from golf is gone accept it you had your fun now move on. Too many courses now

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  3. John July 14, 07:11

    Why is it a strange reaction Geoff? If you are talking about my response, It is the reaction of someone who cares about their own business. Have you looked at the Golf empire website recently? Have you looked through the online tee time providers? Are all those clubs paying tax on all that income they are taking? I can tell you for a fact NO. Look up a few club accounts for free on company check its plain for everyone to see. There are plenty of guests and temporary members declared but very little tax paid.
    It’s ok claiming VAT back but the real issue to making a club successful/profitable/viable is 20% difference on the memberships or green fees. I’m offering exactly the same service and product as neighbouring clubs with a 20% handicap.
    I would also like to see a report giving a balanced view, the thing is their isn’t and never will be one as what is happening is wrong. Why do you think golfs governing bodies won’t get involved or comment?

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  4. Geoff Duffell July 13, 11:27

    What a strange reaction. I too advocate a level playing field. I was merely pointing out that the scales are not as tilted towards private clubs as is made out, never have I seen a report giving a balanced view. Last year my club incurred £52,000 of irrecoverable vat. This can only be made up through members subscriptions which over our 465 members amounted to £112 each. Not as much as vat but overlooked in the proprietary club protestations.

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  5. John July 13, 08:17

    I totally agree with you Adrian all proprietary clubs want is a level playing field. 5% for everyone would be nice but I very much doubt that will happen. HMRC do not want to loose 15% of what proprietary clubs pay. Members clubs don’t want to pay any tax and certainly don’t want to loose any more income so they won’t support anything. If a club cant support itself via its memberships it shouldn’t be allowed to simply generate as much tax free cash as it wants through temporary memberships, open comps etc.

    The law is clear, a private members club should be just that, a club for members and their guests. If that is the case I have no problem with them being tax free. How many clubs are still like that in this country? My guess would be very, very few.

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  6. Adrian Stiff July 13, 07:38

    Geoff – I think you have missed the point. All proprietary clubs want is fairness and both types of clubs should simply trade with parity. I have yet to meet anyone that actually thinks this would not be right. You are correct that if clubs are exempt from Vat then they cant reclaim so the distortion is never fully 20%, John is also right that very few clubs are buying new machinery at the moment but I suppose that’s the by-product of this economy. Probably 5% through the board for everyone would be the best route, that might just appease all three parties.

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  7. John July 13, 05:25

    Geoff, all clubs are aware of the advantages of being able to reclaim some VAT. How many are actually investing heavily at the moment though? Very few can afford to as their regular pay and play customers are now being targeted by ‘private members’ clubs. I think most proprietary clubs would sooner save 20% on their memberships and green fees than reclaim VAT on any machinery. A 20% reduction on fees would be something that could be passed on to a golfer and enable clubs to compete on a level playing field.

    I would suggest the ‘total ignorance’ you talk of would be more appropriately directed at ‘private’ clubs for VAT, CASC and corporation tax avoidance/evasion.

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  8. Geoff Duffell July 12, 23:19

    There seems to be a total ignorance by the advocates of proprietary clubs that private members clubs can only recover input vat in proportion to the vatable income of the club, typically this is between 30-40%. Proprietary clubs ,as businesses, can recover all input vat incurred. The advantage that private clubs may enjoy is thus very much reduced. Consider the prospect of buying a new mower for say £50,000 plus vat whereby the proprietary club reclaims all vat,whereas the private club will have to suffer irrecoverable vat in the order of £6,000 – £7,000. If there were no vat on green fees, the situation,of course, becomes worse.

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