Golf Club Green fees – who are the real winners?

In our January column we reported on the decision of the European Court of Justice that charges by members’ golf clubs to visitors (“green fees”) were VAT exempt (Bridport and West Dorset Golf Club – “Bridport”). HMRC has finally made a partial response to the decision (Revenue & Customs Brief 25/14 of 25 June 2014). The main focus of this Update is on the implications for those who have paid or who continue to pay Golf Club green fees.

Green fees charged from here on

Going forward, the decision is good news for golf clubs. While their entitlement to claim input tax will be reduced (and some may need to consider whether their current partial exemption method remains appropriate), they will be able to retain more of their green fees. The input tax implications of exempt green fees means clubs might not reduce their charges to their current level net of VAT. On the other hand, regular visitors will expect to see such a reduction and there will be commercial pressure on proprietary clubs too.

The past

Subject to time limits and whether claims remain open, HMRC has said it will repay those clubs which reimburse the VAT on green fees to visitors. In view of the adjustments clubs are likely to need to make to their partial exemption calculations (including any capital goods scheme adjustments), this is unlikely to be an attractive proposition. Meanwhile, HMRC is still considering whether it can restrict claims from those clubs which will not reimburse on the basis that such clubs would be “unjustly enriched”.

Arguably, the VAT accounted for on green fees came out of the clubs’ profits and was not “passed on”, so the clubs would not be unjustly enriched by a refund. Clubs had to set the level of their green fees by reference to what the market would bear on a VAT-inclusive basis, as it is hard to see how any visitor could have claimed the VAT incurred on green fees. Green fees are likely to be either:

  • A wholly private expense; or
  • Part of a business’s entertainment expenditure (so the VAT charged in error would have been “blocked”); or
  • Incurred by a charity in running a VAT exempt fundraising event (so the VAT would not have been available for deduction even if the charity were VAT-registered).

How should visitors react?

There is anecdotal evidence that some clubs have already received refunds in the wake of the Court’s decision in Bridport. Those which have not are unlikely to be deterred by any unjust enrichment argument on the part of HMRC, which is likely to be shaky to say the least.

In any event, whether any given members’ club makes a claim or pursues an existing one, past visitors should stake their claims for a refund as soon as possible. Of the categories of visitors listed above, this is likely to be of most advantage to those who have paid green fees in the course of corporate entertainment or charity fundraising events. While such visitors are unlikely to know the status of a club’s claim (or if one has been made at all), at the very least they should be asking for a refund of VAT that they have incurred on green fees from mid-2010 onwards. If they don’t, then shareholders or trustees may not be greatly impressed.

About Terry Dockley

Terry Dockley is a Fellow of the Chartered Institute of Taxation and has been advising on VAT for over 25 years. He joined the Inland Revenue in 1977 as a direct entrant inspector, leaving in 1985 to join Deloitte, Haskins & Sells, which later became part of PwC. He has run his own VAT advisory practice since January 2011.

Terry advises businesses and charities on VAT when it gets more complex, often working closely with other professionals, such as lawyers and accountants. Terry also keeps bees and has four children and four Burmese cats.

If you need more advice on any other VAT issues, please contact Terry Dockley & Co who take the sting out of VAT!Terry Dockley & Co

07787 576783

10 Rectory Close

Newbury RG14 6DE


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