Insolvency Solicitor Suffolk – Golf clubs and VAT

The decision of the European Court of Justice (“ECJ”) in Commissioners for Her Majesty’s Revenue and Customs v Bridport and West Dorset Golf Club Limited (Case C 495/12) is a key judgment for non-profit-making golf clubs where green fees paid by non-members have been subject to VAT.

Before this ruling, it was accepted that charges for playing sport by non-profit-making sports clubs were exempt from VAT. However, HMRC restricted this VAT exemption to members only; a member was not required to pay VAT on these charges as they could take advantage of the exemption in Directive 2006/112 (“the Directive”).

Bridport and West Dorset Golf Club argued that it should not be liable for VAT on non members’ green fees as it is a not-for-profit organisation and that such fees should be exempt from VAT in the same way as members’ subscriptions. However, HMRC argued that under the VAT Act 1994 any supplies to non-members were excluded from the exemption and therefore subject to VAT.

The ECJ, in disagreeing with HMRC’s analysis, decided that, when interpreting the Directive, the VAT exemption should apply to both club members and non-members equally.

HMRC is yet to publish its formal response to the judgment but the case will now be transferred to the UK Upper Tribunal. Early indications are that non-profit making golf clubs (and potentially other organisations run on a similar basis) may be able to claim a refund from HMRC for the VAT paid on the supply of services to non-members.

The period for which refunds of sums already paid over will be able to be claimed will need to be reviewed, however, if you’re a not-for-profit golf club it may well be worth starting to pull together the information you’ll need for any VAT reclaim and watch this space.

John Bradshaw is an Insolvency & Business Recovery solicitor at Barker Gotelee, solicitors in Ipswich

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