Ruling: Green fees must be exempt from VAT

Alistair Dunsmuir
By Alistair Dunsmuir December 19, 2013 18:38

The Court of Justice of the European Union (CJEU) has ruled that VAT on green fees at British private members’ golf clubs has been incorrectly applied for several years.

It is thought that this landmark ruling will have major ramifications for the industry – in particular green fees that visitors to private members’ golf clubs pay must now be exempt from VAT.

The decision should also allow private members’ golf clubs to recover thousands of pounds-worth of VAT paid on green fees over several years. It could also lead to a reduction in the cost of playing golf at private members’ clubs for non-members and there are fears that proprietary golf clubs could close down as a result of the decision.

In 2011 the First Tier Tax Tribunal in the UK ruled that green fees at Bridport & West Dorset Golf Club, which had previously been subject to VAT, should be exempt, as they did not represent ‘additional income’ for the club.

This was set to mean that every private members’ golf club could claim for a VAT refund going back at least four years, generating, in total, millions of pounds for some British golf clubs. Bridport & West Dorset Golf Club alone has been reported as hoping to claw back about £140,000.

However, following appeals, what is believed to be the final decision has not been made until now by the European Court of Justice.

It found that all supplies of the facility to play golf provided by non-profit making clubs must be exempt from VAT and that there can be no exclusion from exemption by reference to green fees being income not arising directly from memberships.

It was also held that it is not possible to apply a general exclusion which narrows the scope of the exemption as provided on the face of the legislation.

“The issue in dispute was whether or not green fees charged to visitors should be treated as exempt from VAT,” said Paul Stewart, director of KPMG.

“HMRC argued that green fees should be taxed whereas on behalf of the golf club we argued that they should be treated in the same way as annual subscriptions.

“I am delighted to say that the lead case taken by KPMG was successful – European VAT legislation had not been correctly implemented in the UK.

“In light of the positive result, we expect that HMRC will shortly start to process claims. Due to the significant volume of claims made, we have contacted HMRC with a view to agreeing a centralised approach for claims processing, to ensure that the matter is dealt with efficiently and that all taxpayers are treated similarly.”

Shirland Golf Club in Derbyshire hopes to receive a five-figure payout as a result of the ruling.

“We are having to look closely at what the ruling’s impact will be but we could be entitled to reclaim VAT paid on non-members’ green fees for the past four years, which would be to a decent amount of money,” said club chairman Mick Murtagh.

“Our membership, like most clubs, has fallen sharply as a result of the recession but if we can reclaim the wrongly-charged VAT we will be able to balance our books and be less reliant on the great generosity shown to us by landowner Martin Speed, who has given us a rent-holiday until March 2015.

“Getting this money back from HMRC will give us breathing space to attract new members as the national economy recovers and allow us to finish the massive improvements we’ve made to most of the course.”

Adrian Houstoun, a tax expert at Kingston Smith, added: “This matter went to the CJEU because HMRC in the UK adopted a policy of permitting not-for-profit golf clubs to only exempt supplies of playing fees to members whilst the dues in respect of visiting golfers were regarded by HMRC as taxable.

“The CJEU have issued their judgement which does not support HMRC and declares that all the playing fees of a not-for-profit golf club are exempt.

“If such golf clubs have accounted for VAT on visitors fees but have not yet made a claim on HMRC they should do so without delay.”

The ruling does not apply to proprietary golf clubs, many of which have complained about a tax distortion and unlevel playing fields between themselves and private members’ clubs for several years.

Fynn Valley Golf Club in Suffolk has said it has already lobbied its MP about the ruling, which it said is “unfair”.

“The result of this ruling means that members, who were already VAT exempt, and now visitors to private members’ golf clubs, will not have to pay an extra 20 percent tax on the cost of playing golf,” said the manager of another proprietary golf club who did not wish to be named, “but members and visitors to proprietary clubs will still have to pay that levy.

“Great news for private members’ clubs who can claim back thousands from the taxpayer. Dreadful news for proprietary clubs that already pay more tax anyway – many will now go under as they will not be able to compete.”


Alistair Dunsmuir
By Alistair Dunsmuir December 19, 2013 18:38
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  1. Boabie January 29, 15:04

    Have any clubs reduced the green fee by the amount of VAT charged? Certainly not the ones I visit. I see an increasing % of the membership fee being charged for Visitors. Not what I would call welcoming. So much so I no longer visit clubs charging visitors a fee more than 10% of the annual membership. They are simply ripping golfers off.
    The so called advisory bodies in England and Scotland don’t believe it is their place to advise on fee’s. Yet these are the same bodies that are trying to promote golf to keep them selves in a job.

    Reply to this comment
  2. richard January 12, 15:12

    Surely the ECJ ruling means that golf societies and visitors are legally (and morally???) entitled to a refund of the VAT that should not have been paid.
    Golf clubs merely collect the VAT and remit it to HMRC.
    The government is not bound to return it to golf clubs for distribution to those that paid the VAT. They could set up alternative means of so doing eg give a contract to G4S or Capita to do it.
    As Vivien Saunders’ pitch illustrates there will be some aggressive efforts to recover any perceived overpayment of VAT at 20%

    Reply to this comment
  3. John January 7, 07:49

    I don’t think this will be all plain sailing yet. I’ve also got the feeling that this won’t go down well with the general public once the press get hold of the story considering the state of UK finances

    Reply to this comment
  4. Midlands golfer January 3, 22:42

    Surely this is relative? If clubs have been correctly using apportionment they will only get the net difference back? Could be a pittance for some that are greenfee driven!

    Reply to this comment
  5. @jacquieblainey January 3, 18:58

    Ruling: Green fees must be exempt from VAT » Golf Club Management

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  6. James Andrews January 3, 13:56

    Surely the VAT was an over payment by the visitor. This is not free money to clubs who will need to source the visitor to give it back.

    Reply to this comment
    • Wally Shinley January 3, 14:02

      it might be paid by the golfer but it is charged to the club. what the club and golfer agree to pay is up to them. What the club pays to the government is set in stone

      Reply to this comment
      • Bill Clarkeson February 1, 11:15

        I am sorry you are wrong. The visitor uses his/her money to pay an invoice from a club part of which clearly shows a VAT element. The club show that income on their VAT return and remit to HMRC. It is not the clubs money, it may be on their paper but again it is not theirs. If HMRC refund VAT it has by law to go back to the person who have made that payment. The core price for the round is the figure ex VAT, a club cannot now say oh we got it wrong in fact it is the full amount. Their invoices prove that lie.

        Reply to this comment
        • Dave March 4, 12:24

          I’m sorry Bill but it is you that is wrong. The law states that VAT is a liability of the supplier of the goods/services (in this case the golf club) not the purchaser. So it represents a cost to the business and, as with other costs, this may be passed on to the customer in pitching the final price. There is no obligation on the supplier to provide a VAT receipt although many show the element of VAT as a matter of course. If the purchaser, is VAT registered then they can offset some or all of the VAT against their own VAT liability so it is helpful to them to have the VAT shown rather than having to ask for an additional VAT receipt.
          So in the legal sense Wally is right. Whether the supplier has a moral responsibility to provide a part refund of the price if he subsequently finds that his service is non-Vatable is another question.
          The amount of the refund is also not straightforward as the golf course will have been able to offset some of the VAT that was charged on it’s own purchases (green keeping supplies etc) against it’s VAT liability on the green fees. In making a VAT refund claim the club will effectively have to rework it’s VAT returns over the relevant period taking the green fees out. The refund that it gets will be less (in some case much less) than the 20% notionally included in the green fee charge. After the Clubs’ accountants have charged their fees for the reworking of VAT returns there may not be a great deal left to refund!

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  7. @MartinSternberg January 3, 13:36

    UK private clubs gets VAT present from EU court, millions in taxes to claim back, death to propietary club model?

    Reply to this comment
  8. Alan Walker (@ahwpgapro) January 3, 13:33

    Ruling: Green fees must be exempt from VAT » Golf Club Management

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  9. @AlanLunt1 January 2, 17:30

    @Dpugh54 tax ruling for private members clubs is an interesting one, looks like members clubs getting a rebate

    Reply to this comment
  10. @RodDenny January 1, 16:42

    Ruling: Green fees must be exempt from VAT » Golf Club Management

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  11. Fynn Valley G. C. (@fynnvalley) December 31, 10:48

    Today we will be lobbying our MP, Dr Dan Poulter about this: #HappyNewYear

    Reply to this comment
  12. @shakespearegolf December 30, 09:24

    About to read: via @gcm_mag

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  13. Fynn Valley G. C. (@fynnvalley) December 24, 08:34

    “@GCM_mag: Several golf clubs fear they will close; others will get £££s from the taxpayer” #distortion #inequality

    Reply to this comment
  14. @Johnwright1205 December 23, 22:19

    @Timcoxonpga Interesting?

    Reply to this comment
  15. @ShandonParkGC December 23, 21:22

    @UTVSport Ruling: Green fees must be exempt from VAT » Golf Club Management

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  16. @ShandonParkGC December 23, 12:21

    @DunmurryGolf @ArdglassGolf @BelvoirParkGolf @MaloneGC @ShandonParkGC: Green fees must be exempt from VAT »

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  17. @ShandonParkGC December 23, 11:40

    Ruling: Green fees must be exempt from VAT » Golf Club Management

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  18. @keanepaul11 December 21, 13:05

    Looks like a positive development for member run golf clubs

    Reply to this comment
  19. Richard December 20, 15:34

    The important thing to remember is that clubs have been using the VATable income to calculate the partial exempt rate at which they can claim back VAT on purchases. Without green fees that rate will go down and they will have to pay back the VAT they have over claimed.

    They will still be better off and should get a refund, but they wont simply get back the VAT they have paid. It isnt as simple as that

    Reply to this comment
  20. @Net_63 December 20, 13:33

    @ClubHeworth – seen this?

    European court VAT ruling

    Reply to this comment
    • Brin Davies February 20, 16:39

      I have read that all non profit members Golf Clubs will be able to claim back overpaid VAT over the past 4 years only- but some will qualify to claim over the past 9 years. What are the circumstances required to enable a Club to a 9 years refund?

      Reply to this comment
      • WST February 20, 17:34

        some clubs can claim back to 1990 I think.

        I gather it’s to do with when they first registered that they wanted a rebate. Your accountants should know if your club did.

        Reply to this comment
  21. Golf Club Management (@GCM_mag) December 20, 10:49

    Several golf clubs fear they will close; others will get £££s from the taxpayer, following European court VAT ruling

    Reply to this comment
  22. @duncantoplis December 20, 09:17

    Ruling: Green fees must be exempt from VAT » Golf Club Management #golf #VAT

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  23. @AntonioConde December 20, 08:37

    @ovidiov @golfbreaks @golfnewsmag Here you are 😉

    Reply to this comment
  24. @gravelwalks December 19, 20:03

    Landmark VAT ruling finds that green fees should be exempt from VAT.

    Reply to this comment
  25. @stupotee December 19, 19:29

    Landmark VAT ruling finds that green fees should be exempt from VAT. This could save some golf clubs; kill off others

    Reply to this comment
    • Bill Clarkeson February 1, 11:09

      Clubs are talking as if it is their money they are re-claiming. In fact it is not.I have paid over £5000 during the last 4 years in opens, visiting parties etc an element of which was VAT as shown on my receipt. The clubs are now saying my money to pay for incorrectly invoiced VAT is theirs, I think not it is mine and I will be re-claiming my money from the Clubs. If they do not pay up I will sue them. If they do not pay up I would consider that a tax / VAT fraud and take action accordingly. I have overpaid approximately £800 on an aggregate basis and I want that back. Golf has become an expensive sport partly due to the mis management by clubs, why they feel they should benefit from a decision which is in reality in favour of the people who paid it I do not know. It was not their money they paid it was the players, who should get it back.

      Reply to this comment
      • Peter Hardaway February 28, 08:35

        I strongly agree with Bill on this the VAT is paid by the player not the club so the money should be returned to the player. I run a golf society and I pay out around £30,000 in golf club fees each year, any of the VAT on this figure should be returned to me.

        The legislation though is very confusing as I don’t know which clubs are exempt from VAT, we play clubs in the Surrey Berkshire area and there prices for 2014 are the same if not more than 2013 and they still show VAT. Even at my local club which is claiming back £95k VAT i have not noticed any reduction in fees.
        Where clubs have issued VAT receipts and retained names and addresses every effort should be made to return the VAT to those that paid it, the money should not be used to shore up failing golf clubs

        Reply to this comment
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