Landmark VAT ruling

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Not-for-profit member-owned golf clubs in the UK could be in line for a substantial windfall after the European Court of Justice (ECJ) ruled they do not have to levy VAT on the green fees charged to visitors report Harris & Co accountants Northampton who have several clients in the sports and leisure sectors.

The ECJ’s ruling in Case C 495/12, marks the final decision in a long-running case brought by Bridport and West Dorset Golf Club, along with tax advisers KPMG, against HMRC. The club argued that as a not-for-profit organisation, the members’ club should not be liable for 20% VAT on visitor green fees which should be exempt in the same way as member subscriptions.

In documentation provided to the ECJ, Bridport, which charges a green fee of between £32 and £38 a round, said it was seeking a refund of over £140,000 in VAT. Reportedly, between 300 to 400 other clubs have also submitted claims as part of the same case.

In its judgment the ECJ said all supplies of the facility to play golf provided by non-profit making clubs must be exempt. There can be no exclusion from exemption by reference to green fees being income not arising directly from memberships, so HMRC’s argument that the visitor green fees represented ‘additional income’ was not valid. It was also held it is not possible to apply a general exclusion which narrows the scope of the exemption as provided on the face of the legislation.

The ECJ said: ‘It follows that if that supply is provided by a non-profit-making body, it is covered by the exemption from VAT provided for in Article 132(1) of Directive 2006/112, it being immaterial whether it is provided to a member of the body or to a visiting non-member.’

Gary Harley, head of indirect tax at KPMG in the UK said: ‘A large number of non profit making golf clubs throughout the UK had lodged claims with HMRC for overpaid VAT on visitor green fees for periods in excess of nine years. I hope that the eventual repayments arising from today’s decision will enable additional investment to be made in their infrastructure facilities to encourage participation in golf.’

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