Suffolk golf club wins VAT ruling against HMRC

Alistair Dunsmuir
By Alistair Dunsmuir November 13, 2018 09:43

A tribunal has ruled in favour of a golf club that it was exempt from paying VAT on its green fees and against Her Majesty’s Revenue and Custom (HMRC), which had said this was tax avoidance.

According to the Suffolk Free Press, the Upper Tribunal upheld an earlier ruling that Stoke-by-Nayland Golf and Leisure was eligible for tax exemption.

HMRC had appealed this ruling, claiming it had seen evidence of a ‘long-standing tax avoidance scheme’.

‘The judgement ruled that the company was exempt from paying VAT on its playing fees, because it qualifies as a non-profit making body,’ states the paper.

The golf club had been pulled into a legal fight when HMRC opened an investigation following a site visit in March 2011, from which it eventually ruled the company was liable for back taxes between January 2009 and September 2013.

The club appealed this to the First Tier Tribunal (FTT), which ruled in April 2017 that the company was a ‘non-profit making body, not subject to commercial influence’. This was appealed by HMRC.

The legal case centred around the relationship between Stoke-by-Nayland Golf and Leisure, which runs the golf club, and Stoke by Nayland Club, a separate company that owns the club building and land.

Stoke by Nayland Club, a subsidiary of The Boxford Group, wholly owned and managed the club until 1996, when the leisure business was established to separate the golf course from the rest of the businesses in the commercial group.

Giving evidence in the case, Susanna Rendall, the managing director of The Boxford Group, stated this was done because running the golf club had been “emotionally draining” and taken a disproportionate amount of time.

“It was like having a thousand greenkeepers on site,” she said. “Every second, a member would have either a complaint or a suggestion. It was just impossible to get on with any other work.

“I didn’t want to destroy the membership.

“The membership needed to be looked after, and nurtured and taken forward, so they could enjoy playing golf on those courses.”

The two companies are run by separate boards, with the golf club operating the golf course and paying an annual license fee to Stoke by Nayland Club, which continued to receive playing fees, which were subject to the usual rate of VAT.

In 2009, citing pressure on revenue due to a decline in memberships, an agreement was reached over a higher license fee, in return for the playing fees being transferred.

But HMRC claimed that the golf and leisure business was set up to exploit the VAT sporting exemption, and argued that the two companies are actually a single commercial entity.

However, the FTT ruled the companies operate ‘on a fair and reasonable arm’s length basis’, and the VAT exemption was valid.


Alistair Dunsmuir
By Alistair Dunsmuir November 13, 2018 09:43
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