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VAT liability of green fees

HMRC has issued a new Revenue and Customs Brief 10 (2016) and updated an existing VAT information sheet 01/15 about a long running case concerning the VAT liability of green fees charged for visitors at non-profit making golf clubs. The particular golf club in question, Bridport and West Dorset Golf Club, had historically accounted for VAT on its green fee income in accordance with the treatment outlined in UK law and HMRC's guidance on the matter.

Following an analysis of case law the golf club submitted a voluntary disclosure in 2009 seeking the repayment of a significant amount of output tax on the basis that the green fees income was VAT exempt and that VAT had been accounted for in error. HMRC rejected the voluntary disclosure and the issue was heard by the Tribunal earlier this year. The Tribunal ultimately found in favour of the taxpayer finding that the UK law limiting the VAT exemption only to members of the golf club was ultra vires. 

HMRC believed that the First Tier Tribunal has erred in interpreting EU law and remained of the view that where clubs that run membership schemes make charges to non-members for the use of certain sporting facilities, such as green fees, the charges are standard rated. The case was eventually referred to the ECJ who agreed that the UK had incorrectly treated the VAT liability of green fees charged for visitors at non-profit making golf clubs. HMRC accepted that supplies of sporting services to both members and non-members of non-profit making sports clubs qualify to be treated as exempt from VAT. However, VAT repayment claims from other golf clubs were rejected by HMRC on the basis that they would be unjustly enriched.

A number of clubs challenged HMRC’s refusal to pay out claims and appealed to the First Tier Tribunal (FTT). The FTT concluded the clubs would be unjustly enriched by 10% and were therefore entitled to a 90% refund of the VAT incorrectly paid. HMRC has decided not to appeal the decision and will be making VAT refunds, subject to claims meeting the terms of VAT Information Sheet 01/15.


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