Golf clubs could get £500m in VAT rebate

Seamus Rotherick
By Seamus Rotherick January 23, 2014 15:12

The UK government could pay British private members’ golf clubs half a billion pounds in a VAT rebate.

The figure, made in the Belfast Telegraph, comes a month after the Court of Justice of the European Union (CJEU) ruled that green fees paid by visitors at British private members’ golf clubs must, like membership subscriptions, be exempt from VAT.

It means that all private members’ golf clubs in the UK, in which there are more than a thousand, can claim the VAT paid on green fees from the Treasury, backdated by four years, and in some circumstances, back to 1990.

“The total amount the Treasury may have to hand back could be as much as half a billion pounds,” states the newspaper.

Bridport and West Dorset Golf Club alone, which won the CJEU case, is reportedly seeking £140,000 in a rebate.

Gemma Gower, VAT manager at accountant Mitchell Charlesworth, said other clubs should claim now. “This could see golf clubs claiming hundreds of thousands of pounds back from HMRC,” she said.

“Golf clubs should not delay starting the process of claiming back what is rightfully theirs, as the longer they delay, the more VAT they stand to lose. Getting a claim moving now could bring real financial benefits, particularly to small clubs and those which are struggling with a downturn in usage or membership.”

More proprietary golf clubs are complaining of distortion in the wake of the ruling.

Kenneth Logan, head of proprietary Edenmore Golf Club in Northern Ireland, said that even before the ruling someone using his club could pay £118.33 in VAT on their membership, while their neighbour at a members’ golf club pays none. He has called on the government to take action.

“This ruling will mean an even bigger differential between members’ and proprietor-owned golf clubs,” he said.

“I have nothing against member-owned clubs, we work with and play alongside them all year round and they have not done anything wrong.

“We are all having to abide by the rules – all I would like to see is a fairer system across the board. It’s very difficult in these economic times to make a business attractive to customers and this difference in tax rates does not help.

“The government needs to take action to narrow this gap.”


Seamus Rotherick
By Seamus Rotherick January 23, 2014 15:12
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  1. @OpenSol2013 January 30, 18:25

    What do you intend to do with yours? Give back to members or invest in the club? Perhaps new IT systems?!

    Reply to this comment
  2. @Dan1at95 January 24, 10:41

    Golf clubs could get £500m in VAT rebate » Golf Club Management

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  3. @Dan1at95 January 24, 10:41

    Golf clubs could get £500m in VAT rebate

    Reply to this comment
  4. john January 24, 10:37

    If a so called ‘Private’ members club is a not for profit organisation, why are Chipping Norton GC building a new function room for 200 people?
    Is this because they just have a lot of very friendly and sociable members or do they want to attract weddings and conferences? Surely this is a commercial venture?

    (and by the way Chipping Norton is a CASC registered golf club, so saving 80% on business rates, I wonder if they will now have the decency to withdraw from it? Looking at their website you would be hard pressed to tell if they where a private members club or a big hotel chain)

    If you could find me more than a handful of golf clubs in the UK that do not hire facilities for functions or take green fees from societies or visiting golfers I would be very surprised. Do they do this because they are all very generous and good willing or are they just trying to raise as much cash as possible?

    Most ‘Private’ members clubs are/have been living way beyond their means and won’t accept that. Is a members surplus actually what is left over from the members subscriptions every year? In most clubs you will find their is no surplus and actually quite a large deficit, until you bring visitors and societies into play (who are not members).

    I have been played golf from being quite young and worked in the industry since leaving school and there are a few facts that some people can’t seem to either grasp or accept.

    When I first started in the industry most clubs in my area had full memberships of 600+, joining fees and long waiting lists, now there are very, very few that have all 3. There aren’t many everyday clubs around now that people join just for the kudos of membership and there are far fewer people retiring in their 40′ and 50’s. People that join a club and are willing to pay full memberships want to play regularly and that unfortunately is 2 or 3 times a week.

    So here’s the maths part: (and I’ll try and keep it simple)
    If for example a club needs £500k a year to make ends meet (and many need far more)
    500 members paying £1000 or 1000 members paying £500
    Most clubs would admit to being fairly busy if they had 24 people an hour tee off.
    Lets say that was kept up for 8 hours a day, 196 people on saturday and 196 sunday (and we all know many people will play both days) when do the other 100-600 people play? Quite simply they don’t, they play with friends and join societies and then play the same courses on either a green fee or special offer for cheaper than it would cost for a membership. To put it quite simply, which ever way you look at it, the traditional membership system at a golf club doesn’t work in 90% of cases. I can point you in the direction of many clubs that are now operating on between 200-400 members and all of these clubs now act commercially offering greatly reduced greens fees and special offers trying to fill their courses up, and what does this lead to? Their few remaining members getting the hump and complaining about visitors clogging the course up. Golf clubs are their own worst enemy, constantly driving prices down to try and attract more custom.

    Reply to this comment
  5. Alan Walker (@ahwpgapro) January 24, 07:19

    Golf clubs could get £500m in VAT rebate

    Reply to this comment
  6. @julianmellorpro January 24, 07:14

    Wow, this could be interesting for #golf #clubs

    Reply to this comment
  7. Dorset Golf (@dorset_golf) January 24, 06:43

    Golf clubs could get £500m in VAT rebate

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  8. @GolfClubNBeds January 24, 06:16

    This is not fair on proprietary clubs 🙁

    Reply to this comment
  9. @PiltdownGolf January 23, 22:42

    can’t come soon enough!

    Reply to this comment
  10. @rhythmcorp January 23, 21:53

    Golf clubs could get £500m in VAT rebate

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  11. @QuigleyInfo January 23, 19:38

    Golf clubs could get £500m in VAT rebate

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  12. Private Golfer January 23, 18:28

    The fundamental difference is a Private Member Club is run as a not for profit entity, run by its members for the benefit of its members any surplus is reinvested for the benefit if the club. A proprietary club exists for only one purpose, to make a profit for its owner. That is the reason for the different VAT treatment.

    The only people making money from a golf club are the owners of proprietary clubs, the reason they are constantly bleating is because they want as much cash in their pocket as possible.

    Private members clubs have been taking the VAT hit by charging a realistic green fee and absorbing the the VAT component. That is why the VAT is to be refunded to the clubs, because this was challenged from the moment the VAT rules were changed and clubs accepted the income lost in the VAT they were wrongly handing over to HMRC in the expectation that it would be refunded on conclusion of the case.

    Comparing a private members club to a proprietary club is comparing apples and oranges, yes people play golf at both but the ethos and reason for their existence is completely different.

    Reply to this comment
  13. Alan January 23, 17:59

    Well golf is now the most unique sport in the UK from a VAT perspective. The private members clubs pay no VAT on yearly subs and visitor green fees and the local muni, where numerous juniors and beginners start their golfing lives (because they can’t afford private membership) are levied 20% tax. Is this not the most ridiculous situation ever ? Same sport, same rules, same game, same everything and one lot have to pay 20% TAX for the privilege of playing a game whilst the other lot, playing the same game, don’t have to ! You couldn’t dream it up.

    Reply to this comment
    • Peter January 23, 20:40

      Not surprisingly you are missing the point. A PRIVATE members club is just that. Our self supply subscriptions are of course VAT exempt and similarly our input recovery is limited by the partial exemption calculation. When you have a drinks kitty with your mates do you have to levy VAT on them? No. Do you get to recover the VAT on the beers you buy? No. You can’t have your cake and eat it. Become a non profit making members club and your issues over vat on subs and green fees disappears. Of course you will then recover less of the VAT suffered on your input costs as well but at least your apparently altruistic agenda could be met!

      Reply to this comment
      • Alan January 23, 20:59

        Not supprisingly you have missed my point because we’re talking GOLF here not beers with mates ?? My point is the fundamental issue of the massive 20% distortion between members not for profit golf clubs and proprietory, supposed, for profit clubs. Same game, same golf etc but taxed at 20% at one and not the other because your in a ‘club’. The minute a proprietary club tries to create a non profit members element within their business for a VAT saving HMRC cries ‘foul’. Again my point is DISTORTION & unfairness – simples.

        Reply to this comment
      • Jon January 24, 07:39

        The simplest explanation for the hard of thinking was best explained the last time this story was publicised on GCM, for those that missed it, I shall explain again.

        If you bought a new car for £20k and afterwards it was decided that VAT shouldn’t have been levied, who should the £4k be returned to? The customer or the dealer?

        Reply to this comment
  14. @tombridgerpga January 23, 17:35

    This would be nice @timlowe64 @BetchworthPark @GolfSurrey

    Reply to this comment
  15. Stuart January 23, 17:04

    Bearing in mind HMRC are going to be very unhappy about this decision they may respond by looking at the partial exemption calculation over the same period as the refund. The decision will in effect increase exempt income, reduce standard rated income and consequently there will have been an over recovery of input tax over the same period. Anyone wishing to discuss this issue feel free to contact me on 01702-390682.

    Reply to this comment
  16. richard January 23, 16:36

    Is it a victory?

    Private members golf clubs and proprietary golf clubs for some years have been directed by HMRC to charge VAT on visitors’ green fees.
    As I read it the ECJ ruling states that the VAT should not have been charged in the case of private members golf clubs.
    In essence the private clubs have simply collected the VAT and remitted it directly or indirectly to HMRC.
    The VAT was paid by golf societies, companies, individual visitors and members’ guests; clearly they are the entities legally entitled to any refund of the VAT.
    Surely, there is no legal or moral reason why the private clubs should benefit directly from a return of the VAT they should not have imposed on their visitors. For visitors to Open Championship courses the VAT is as much as £50 per visitor.
    Members clubs will benefit ultimately by virtue of making competitive reductions in green fees and attract custom from proprietary clubs.
    It goes without saying that the goverment will consult (delay) for as long as it reasonably may and will then determine how to implement the return of the VAT.
    Returning it to the private clubs is only one of the options available to the government.
    Others include using a services company e.g. G4S or setting up “hotline” through which individuals may make a claim. The latter may be the easiest.
    Inevitably the private clubs will have to provide the records of payment whichever method of return is adopted.
    This will place a considerable burden on the administration staff. The government may be forced to pay some compensation for this work.

    It looks like another fiasco brought about as a result of E U interference

    Reply to this comment
    • Rob Goodsall January 23, 16:52

      The EU just agreed with the British court that made the original decision. HMRC appealed to it.

      It makes more sense to blame judges generally than the EU for this ruling, or politicians for creating daft laws

      Reply to this comment
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