Following on from the result in the Bridport and West Dorset Golf Club VAT case at EU Level (C 495/ 12), HMRC have now issued guidance on the line they will take on VAT claims made in respect of non-members’ green 
fees (HMRC VAT Brief 25/14 refers). HMRC state that they plan to enact the change to their approach by 1 January 2015.
In short, HMRC’s view of the treatment of fees charged to non-members of a members’ golf club for playing at the club (green fees) was that they could not be VAT exempt under the sporting exemption VAT rules, thus treating such fee income as liable to VAT at the standard rate. Over the past few years, a number of retrospective VAT claims were made by members’ golf clubs, on the basis that the exemption for sports played by members of a club should also be extended to non-members. These claims were rejected by HMRC, pending the outcome of the lead case, Bridport and West Dorset.
HMRC now accepts that the VAT exemption was available on fees charged to non-members, provided that the “services were closely linked and essential to sport” and were “made to the persons taking part in the sport”.
What action is required?
Any sports club that has not submitted a claim should consider whether it has/is accounting for VAT on guests’ fees and also how this change to the VAT treatment of income will affect the sports club’s VAT recovery on costs, both for the past and on an on-going basis.
I run a proprietary club – can I make the claim?
No. The exemption applies only to non-profit making bodies so the status of the club would need to change going forward to make use of the exemption.
Will HMRC repay the VAT to the club?
HMRC are considering the claims in two phases:
- Phase 1: where the members’ clubs have decided to reimburse the non-members and must demonstrate they have made arrangements and a legally binding commitment to reimburse the non-members in a timely manner.
- Phase 2: where HMRC consider that unjust enrichment will be applicable, they are considering restricting such claims, e.g. where the amount charged to non-members has been/will be reduced due to treating the pricing as inclusive of VAT, if applicable, and where no refund to the non-member player would be made by the club as a result.
There are some key points arising from this:
- Here, HMRC will be looking to offset any reimbursable VAT against any previously recovered input VAT which, under the partial exemption method used by the club, will now relate wholly or partly to VAT exempt supplies rather than (as previously) to taxable supplies.
- The possible assumption on HMRC’s part that the pricing of the non-members’ green fees was influenced by inclusion of the VAT element and whether this is a valid reason not to repay the claims.
- Can HMRC’s “unjust enrichment” concept be over-turned in favour of the claimant club where it can be demonstrated that there were reasons/factors other than VAT for the pricing of the non-members’ fees to be higher than the members’ fees.
- Clubs which are yet to make a claim will be time-blocked in how far back they can go – the four year cap.
Should you wish to discuss whether your club is eligible to make a claim, please contact Marianne Hawksworth on +44 (0)1962 735350 or your regular TVC contact.
