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• Victory for Golf Club: Green Fees Exempt of VAT?

It could be considered that Bridport and Dorset Golf Club has scored a "hole in one" following their recent success in their dispute with H M Revenue and Customs over the VAT status of green fees.

In the UK, green fees are treated as liable to VAT irrespective of the status of the supplier- i.e., whether they are received by a non-profit making members club ( as in the case of Bridport) or a commercial enterprise (e.g., a proprietary  or municipal club).

In this particular Tribunal case, H M Revenue and Customs (HMRC) argued that an exemption in respect of green fees for non-profit making members clubs would create a distortion of competition between them and commercially run clubs.  HMRC also considered that the green fee income was merely "additional income" for the club and not necessarily income that related to the principal objects of the club, which is the provision of facilities to its members.

The Tribunal acknowledged that there may be enough grounds already to allege a distortion of competition between members clubs and commercial clubs as regards the VAT treatment of membership subscriptions.  The Tribunal considered that the exemption of green fees for members' clubs would not create such a distortion in its own right.

Also, they found (on the facts of this case) that green fees were not merely "additional income" (which is ancillary or incidental to the principal objects of the club) but were actually a key element in the budget of the club and are reinvested into the running of the club. In a case where green fees are merely "ad-hoc" income, or are earned on an occasional basis, then the Tribunal agreed that exemption could not apply.

This decision, if ultimately upheld, has implications for any non-profit making sports club, and not just golf clubs, as regards income received from visitors or temporary members.

So What Now?

It is possible that H M Revenue and Customs will Appeal against the decision and it may be prudent for clubs not to exempt current or prospective green fees or temporary membership fees until the matter is finally decided. However, non-profit making sports clubs which have not made a retrospective claim should now seriously consider doing so, certainly for the last 4 years.

And what of commercially operated clubs?  Well, there is currently a case going through the court system challenging the UK' s VAT treatment of commercially operated clubs (Chipping Sodbury Golf Club) and we will notify relevant clubs as soon as any decision is released.

Any club which would like to discuss the making of a retrospective claim or who wishes to be added to our mailing list for regular mail or e-mail updates should contact our VAT Partner, David Pegg, on 01392 288555 or by email at david.pegg@thomaswestcott.co.uk