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HMRC Loses Golf Match: Long-Running VAT Dispute Comes to an End

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17th February 2014

HMRC Loses Golf Match: Long-Running VAT Dispute Comes to an End

Around 1,000 British golf clubs are set to share a £115MN cash windfall after the European Court of Justice (ECJ) ruled against HMRC in a long-running VAT dispute. Charges for playing sports at not-for-profit clubs, such as members’ golf clubs, have been VAT-exempt since 1990. However, HMRC restricted the exemption to income from members, which meant that clubs had to pay VAT on visitors’ or ‘green’ fees.

Following a legal challenge brought by Bridport and West Dorset Golf Club against the Revenue, the ECJ ruled at the end of December that the exemption must also cover charges to visiting players and that this should be backdated. Several clubs have issued claims to recover VAT, with others now expected to follow suit, which could lead to a significant back-payments from HMRC. The Revenue will announce its response in the next two weeks, but is expected to accept the decision rather than challenge it. Golf clubs that have not already put in a claim should do so now, as they may be eligible for VAT repayments on green fees dating to February 2009. Contact the Corporate and Commercial team at IBB for immediate advice.

Green fees rebate

Bridport and West Dorset Golf Club is a relatively small club in a rural area. It charges a green fee of between £32 and £38 a round, and stated in the case documentation that it was seeking a refund of over £140,000 in incorrectly paid VAT. It is thought that between three to four-hundred other clubs have also submitted claims as part of the same case. It will, of course, be down to individual clubs to decide whether they pass this 20% saving onto non-members playing on their courses. (The chair of the Association of Golf Club Owners Vivien Saunders has suggested that all UK private members’ golf clubs should hand whatever VAT refund they receive back to the golfers who paid green fees at their clubs.)

Wider discontent

This judgment does not deal with the wider discontent in the golfing sector, in which many commercially operated clubs feel that they are disadvantaged by the VAT exemption enjoyed by non-for-profit clubs. The ruling also does not apply to proprietary golf clubs, many of which have complained about a tax distortion and not quite level playing fields between themselves and private members’ clubs for several years. There are around 3,000 golf clubs across the UK with just over half classed as non-profit clubs. These not-for-profit clubs are also exempt from VAT on membership fees, unlike proprietary or for-profit clubs. Around 5% of golf clubs across the UK are run by local authorities.

The full ruling is available here. For advice on corporate and commercial matters call the Corporate and Commercial team at IBB. IBB provides West London's corporate community, from European HQs of multinationals to UK plcs to large privately-owned businesses, with expert legal advice. We also look after the personal interests of local business leaders and their families, as well as those in more vulnerable and excluded communities. Our teams and solicitors are recognised as leaders and experts across a number of areas by the UK's independent legal directories.

Our experienced Corporate and Commercial team provides a wide range of transactional services. For advice, contact a member of the team, call us on 08456 381381 or email corporate@ibblaw.co.uk.

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