Golf clubs’ fury over new VAT repayment delay

Alistair Dunsmuir
By Alistair Dunsmuir November 6, 2014 11:13

Hundreds of private members’ golf clubs are now almost certainly not going to receive any VAT repayments this year following a new tax chamber ruling, despite an EU judgement being passed in 2013 which suggested they would be collectively paid millions of pounds.

Last year 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.

42-43 Clubhouse1

Bridport and West Dorset Golf Club. The original VAT case

However, while the Irish government changed its green fee VAT advice to golf clubs within days of the ruling, HMRC in the UK was criticised for taking several months to accept the legislation and then for stating that it intended to restrict payments to golf clubs.

HMRC also asked the UK tax tribunal that all appeals that stood behind the original case involving Bridport and West Dorset Golf Club, which was represented by accountancy firm KPMG, be put on hold to give it time to decide whether it would argue that clubs could not receive payments as a process called unjust enrichment may have occurred.

Now in response, a tribunal judge for the First Tier Tribunal Tax Chamber has directed KPMG to nominate four clubs for HMRC to study to see whether unjust enrichment did occur, which some UK tax experts have stated is unlikely.

A golf club manager who was at the hearing told Golf Club Management that HMRC said that it will employ an American sports’ tax expert, believed to be Professor Stefan Szymanski from the University of Michigan, for a six figure fee, to visit the four clubs and carry out the review.

This process will take place before the end of the year and a new hearing has been scheduled to take place at the Royal Courts of Justice at the end of January.

Earlier this year Paul Stewart, director of Indirect Tax at KPMG, told us that HMRC is unlikely to win the argument about unjust enrichment.

“Regarding unjust enrichment, HMRC would need to show that a golf club’s pricing structure passed the economic burden of the VAT on to customers,” he said.

“We expect clubs to continue to charge the same price for their green fees [following the EU’s ruling], which supports our view that fees are generally set by reference to the market regardless of the VAT liability, making the unjust enrichment argument difficult for HMRC to pursue.”

A manager of a private members’ golf club said he was disgusted by HMRC’s “delaying tactics” behaviour.

“They have tried to stop this for years and they know the game is up,” he said. “And now they’re wasting thousands of pounds of taxpayers’ money to delay this by just a few more weeks. They have lost every legal argument they entered into and now they must pay us the money they owe us.”

However, Vivien Saunders, chair of the Association of Golf Course Owners (AGCO), which represents proprietary golf clubs, which are not able to claim the VAT back on green fees, disagrees.

“Can this country really afford to hand out £500 million to posh member-owned golf clubs? And remember if we don’t keep fighting, all the range balls will be VAT exempt too. AGCO has a case in front of Europe and a VAT tribunal in the pipeline,” she said.

“Rest assured that we are fighting the corner of all the proprietary clubs and the UK taxpayer.”


Alistair Dunsmuir
By Alistair Dunsmuir November 6, 2014 11:13
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  1. Steve Bloxham November 28, 21:20

    Let’s remember Vivian Saunders and her like run golf clubs for one purpose; personal enrichment. They take money from golfers wallets to put into their own.
    Private members clubs operate only to provide the best club they can for their members. I pay to help run our club, just like the other volunteers.
    Any surplus generated in the operations of the club are reinvested in the course and the clubhouse, no one profits.
    I and the other volunteers who run private members clubs pay to be a member of the club we run for the benefit of people who play a sport they love. In contrast Vivian Saunders gets rich off the back of people playing a sport they love.
    I find her stance sickening.

    Reply to this comment
  2. Alastair Kerr November 21, 22:50

    Vivien Saunders has continually failed to point out that her golf course developments will have enjoyed a full refund of all VAT charged on all their maintenance and development costs. Members clubs in the past have only been able to claim back input tax under the Partial Exemption rules. Under the new rules they will not be able to claim back any VAT relating to the actual playing of golf. In respect of the repayment any VAT repaid the Members clubs will be the VAT charged on Green Fees minus that amount claimed under the partial exemption rules. It is fact arithmetically possible, albeit unlikely, for a members club to have to repay an amount to HMRC under the present if it has a relatively high proportion of it’s golf income from visitors fees and has also spent significant sums on course reconstruction during the periods under review for refunds.

    Please Ms Saunders present the whole argument and not just that which suits your current argument

    Reply to this comment
  3. Gary Constable November 6, 14:15

    I haven’t seen any article relating to the other side of the story whereby the course becomes exempt from VAT and therefore you cannot claim any inputs?

    Reply to this comment
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