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BRIEFING PAPER

Number 01052, 7 March 2017

VAT & sports clubs By Antony Seely

Inside: 1. VAT : a short introduction 2. VAT and sports clubs – the

changes made in 1994 3. The March 1998 Budget and

the 1999 Order 4. Proprietary (profit-making)

clubs and members (non-profit-making) clubs

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Contents Summary 3

1. VAT : a short introduction 4

2. VAT and sports clubs – the changes made in 1994 6

3. The March 1998 Budget and the 1999 Order 9

4. Proprietary (profit-making) clubs and members (non-profit-making) clubs 14 4.1 Arguments for extending the scope of VAT-exemption 14 4.2 Green fees charged by members clubs to non-members 17

Cover page image copyright: Attributed to before the game by hojusaram. Licensed under CC BY 2.0 /

image cropped.

3 VAT & sports clubs

Summary The VAT liability of sports clubs has proved a long and complex issue. In April 1994 the rules determining the VAT treatment of non-profit-making clubs were amended, following complaints by sports clubs and the European Commission that UK law was incompatible with European VAT legislation. Subsequently in the March 1998 Budget, a draft Order was laid to amend these provisions, to prevent the practice of some commercial sports clubs seeking to enjoy the same VAT exemption granted to non-profit-making clubs. This was widely criticised for affecting the VAT position of a number of genuine non-profit-making clubs, and it was allowed to lapse. A revised draft was published in January 1999, with the intention that the Order would take effect from 1 April 1999.1 Following discussions with interested parties, HM Customs & Excise made further changes before the Order was laid on 20 July 1999.2 This legislation was debated on 26 October 19993 and finally came into force on 1 January 2000.4

This note examines the background to this change before looking at the related issue of the VAT position of proprietary golf clubs.

1 HC Deb 1 February 1999 c414W 2 At this time HM Customs & Excise administered VAT and other indirect taxes. The department was merged

with the Inland Revenue to form HM Revenue & Customs in April 2005. 3 First Standing Committee on Delegated Legislation, Value Added Tax (Sport, Sports Competitions and

Physical Education) Order SI 1999/1994, 26 October 1999 4 Guidance on the current law is given in VAT Notice 701/45: VAT & sport, May 2016.

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1. VAT : a short introduction VAT is charged on the supply of all goods and services made in the course of a business by a taxable person, unless they are specifically exempt. All businesses must register for VAT if their turnover of taxable goods and/or services is above a given threshold, which is currently £83,000.5 VAT is charged on the additional value of each transaction, and is collected at each stage of production and distribution. A business pays VAT on its purchases - known as input tax, and charges VAT on its sales - known as output tax. It will settle up with HM Revenue & Customs for the difference between the two. In the end the cost of the tax is borne by the final consumer.

In the UK, VAT is charged either at the basic rate – currently 20% – or the zero rate, though there is limited use of a reduced rate of 5%.6 The exemption of goods and services from VAT should be distinguished from their being charged a zero rate. In the latter case these supplies are technically taxable, and though no actual tax is paid on them, they still count as part of a business’ taxable turnover. VAT charged on inputs relating to zero-rated activities can be reclaimed, unlike the VAT incurred by a business in the course of an exempt activity.

The first steps toward harmonising the VAT systems of Member States were taken in the late 1960s. However, it was the sixth VAT directive (77/388/EEC), adopted on 17 May 1977, which marked a turning point in the development of EU VAT law – as governments agreed on common criteria for the VAT base in all Member States (ie, specifying those goods and services which could be exempted from tax).7

Initially the sixth directive focused on the VAT base rather than VAT rates, though it had implications for the UK’s zero rates.8 Article 28(2) allowed Member States to maintain “reduced rates and exemptions... which are in force on 31 December 1975 and which satisfy the conditions stated in the last indent of Article 17 of the second council directive of 11 April 1967.” Article 17 refers only to exemptions maintained for “clearly defined social reasons and for the benefit of the final consumer.” As a result the UK was allowed to maintain its zero rates, provided they satisfied these criteria. Of course, all Member States are governed by these directives on decisions they take on the coverage of VAT, and - under the terms of later amendments to the sixth directive - on decisions taken about their VAT rates. Though the UK and Ireland are the only countries to use zero rates very much, there is considerable variety in VAT rates on certain goods and services across the EU.9

5 With effect from 1 April 2016 (HMRC, VAT registration thresholds, February 2017) 6 HMRC publish general guidance on the structure of the tax on Gov.uk. 7 The main provisions are transposed into UK law by the VAT Act (VATA) 1994. 8 Zero-rated supplies are set out in schedule 8 of VATA 1994. 9 see European Commission, VAT rates applied in the Member States of the EU,

January 2017

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Agreement on harmonising the rates of VAT took much longer. It was reached in June 1991, and encompassed by directive 92/77/EEC of 19 October 1992. As a consequence of this agreement all Member States:

• Have had to apply a standard VAT rate of 15% or more from 1 January 1993.

• Have the option of applying one or two reduced rates, no lower than 5% to certain specified goods, as listed in Annex H of the directive.

• Are entitled to continue charging any lower rates, including zero rates, that had been in place on 1 January 1991, provided they are in accordance with Community law.

In November 2006 the European Council of Finance Ministers adopted a new principal EC VAT directive (2006/112/EC), which revised or recast both the first and the sixth EC VAT directives, to reorganise the provisions and set them out in a clearer way.10 There have been only minor changes in the rules regarding the list of supplies that may be charged a reduced rate of VAT since then.11

10 Council Directive 2006/112/EC of 28 November 2006 on the common system of

value added tax (OJ L 347, 11 December 2006). Annex XII provides a correlation table that shows the destination of all the articles in the sixth VAT directive. HM Revenue & Customs Business Brief BB22/06, 11 December 2006.

11 Further detail on the development of these rules is given in a second Library note: VAT – European law on VAT rates, SN2683, 20 May 2016.

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2. VAT and sports clubs – the changes made in 1994

Supplies made by sports clubs have been liable to VAT since the introduction of the tax in this country in 1973. As noted, the VAT base in the UK, as with all Member States, is determined by EU law. Initially the scope of VAT was established by the sixth EC VAT directive (77/388/EEC) – in particular, Article 13 of the directive which specified those supplies Member States had to exempt from VAT. This list included “certain services closely linked to sport or physical education supplied by non-profit-making organisations to persons taking part in sport or physical education”, under item 1(m) to Article 13A.12 At this time, the UK took advantage of another provision so as to be able to continue to levy VAT on supplies made by sports clubs. Under Article 28 of the directive, Member States were allowed to charge VAT on selected items which would normally be exempt – including sporting services by non profit-making bodies – but for a transitional period only.13

Initially it was envisaged that this transitional period would be five years only. As it transpired, Member States agreed to abolish most of these derogations from 1 January 1990.14 Among the derogations withdrawn at this time were two that had allowed Member States to charge VAT on certain sporting supplies: services closely linked to sport or physical education by non-profit-making organisations; and, certain cultural services and goods supplied by public bodies (specifically items 4 and 5). Nevertheless the UK continued to charge VAT on these supplies, thanks to a further provision of this agreement. In brief, Member States were allowed to continue charging VAT on these activities, if, and only if, exempting them would result in competition being distorted.15

This proviso regarding the potential for certain tax exemptions distorting competition drew on a similar test in the sixth VAT directive; specifically Article 13A(2)a, which allowed for supplies from non-public, non-profit-making organisations to be VAT-exempt provided “exemption of the services concerned shall not be likely to create distortions of competition such as to place at a disadvantage commercial enterprises liable to value added tax.”16 The UK took the position that introducing VAT exemption for sporting services made by non-profit making sports clubs would mean unfair competition for commercial sports clubs, and left the VAT position of non-profit making clubs unchanged. In July 1992 the European Commission severely criticised this practice. The Commission argued that this went against the basic rules and objectives of the sixth 12 These provisions are now consolidated in Article 132 of Council Directive

2006/112/EC. Item 1(m) to this Article provides for the exemption of sporting services, retaining the wording of Article 13A(1)(m).

13 Annexes E and F to the directive listed the supplies covered by this derogation; item 1(m) to Article 13A was included in annex E.

14 under the eighteenth VAT directive (89/465/EEC), agreed on 19 June 1989 15 under Article 1(1) of 89/465/EEC 16 A similar proviso regarding the exemption of these and other specific services is

made under Article 133 of Council Directive 2006/112/EC.

7 VAT & sports clubs

directive, and should be withdrawn.17 The UK’s initial response was that there had not been any significant change in circumstances since July 1989, when this had been agreed, to justify the exemption of these supplies.18

A number of sports associations lobbied strongly for the UK to adopt the Commission’s point of view. In addition, HM Customs & Excise was given legal advice that if VAT exemption was withheld on these grounds, the UK would have to consider the circumstances of each and every individual club. Even if this was feasible, there would be the difficulty of ensuring consistency in decisions about whether to exempt a club’s supplies from VAT or not.

In July 1993 the then Conservative Government announced that it would introduce a limited VAT exemption covering the supply of certain sporting services by non-profit-making organisations.19 In February 1994 Customs published an information paper, and a draft of secondary legislation to effect this change.20 The Order was laid before the House on 10 March, and came into effect on 1 April 1994.21 Exemption was extended to non-profit making bodies making supplies of sporting services, but not local authorities. Exemption covered supplies made to individuals that were directly related to sport, including membership subscriptions and the hiring of sports equipment and facilities to members. Non-profit-making sports clubs which had charged VAT on sporting supplies since 1 January 1990 (when the eighteenth directive came into effect) were entitled to make a claim for repayment of VAT. Subsequently the total amount refunded by the revenue authorities to sports clubs was estimated to be £150 million VAT plus £30 million interest.22

At the time there was some controversy as to whether individual clubs would pass on any repayment to their members or not. In cases of repaying VAT which has been incorrectly assessed, it is the responsibility of revenue authorities to make a repayment to the body which initially accounted for the VAT and made the claim for repayment. Indeed there is no provision in VAT law that would require repayments to be redistributed to individual consumers - in this case, club members.23 Writing in the journal Taxation in June 1994, one commentator argued 17 Com (92) 215 final, 2 July 1992 pp9-10 18 Indeed the then Conservative Government argued that as the eighteenth directive

had been agreed, there was no reason to abolish this particular derogation (HM Customs & Excise explanatory memorandum, 8 September 1992).

19 HC Deb 22 July 1993 c303W 20 HM Customs & Excise, Exemption from VAT for sporting services, 11 February 1994 21 the Value Added Tax (Sport, Physical Education and Fund Raising Events) Order SI

1994/687. The Order amended the wording of schedule 6 to the Value Added Tax Act 1983, which – at this time – set out those goods and services which were exempt from VAT. These provisions are now consolidated in schedule 9 of VATA 1994, as amended. Group 10 to schedule 9 sets out exempt supplies related to sport, sports competitions and physical education.

22 HC Deb 6 November 1996 c544W. VAT refunds are subject to rules regarding ‘unjust enrichment’, to prevent businesses from being enriched at the expense of others who, for all practical purposes, bore the burden of the wrongly charged VAT. These rules, strengthened in 2005, are consolidated in s80(3A)-(3C) of VATA 1994. They are relevant to the discussion of golf green fees at the end of this note.

23 A point confirmed at the time in answer to a PQ (HC Deb 27 February 1995 c400W).

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that it was very unlikely that members could insist on a repayment from their club:

There is no rule of VAT law which requires the repayments to be refunded to the member subscribers ... [In addition], in my opinion when subscriptions ... were requested by the clubs and paid by the members, there was no implied term that, if it later turned out that VAT was not payable after all, the clubs would be obliged to pay refunds to the members ... After all, we are dealing with members’ clubs which exist in the interest of the members, not with proprietary clubs which exist, at least in part, with a view to making profits at the expense of the members. And we are also dealing with a situation where at the time the members thought that a subscription of £x plus VAT was right - so that they were prepared to pay the gross figure for their privileges as club members. In all probability they would also have been prepared to agree that if, in an unforeseen eventuality, the club got something back from Customs and Excise, it would be able to deal with it then in whatever way the committee judged at the time to be in the best interest of the members.24

The author went on to make the point that any personal redistribution would pose serious administrative problems. How, for example, should the subscription fees of members who had subsequently resigned from the club be treated? In practice, sports clubs tended to reinvest the money directly in new facilities to be enjoyed by all members, rather than consider redistribution.

It had been intended that exemption would be extended to supplies made by local authorities, but in May 1995 Customs confirmed that these supplies would continue to be standard rated.25 Many authorities had argued that extending VAT-exemption would result in increased charges for customers. If exempt, local authorities would no longer be able to reclaim the VAT they had incurred in the course of making sporting supplies. These could be considerable sums, especially if the authority had invested in major building works to provide sporting services.26

24 “Whose money is it anyway?”, Taxation, 23 June 1994 25 HM Customs & Excise Business Brief 9/95, 8 May 1995 26 In answer to a PQ in 1997 on the different VAT treatment of profit and non-profit-

making sports clubs, the then Minister of State at the Department of Social Security (Lord Mackay) noted that for subscription fees, “local authority courses pay VAT; indeed, I understand they are content with that situation. Non-profit making golf courses pay no VAT; profit-making commercial courses pay VAT” (HL Deb 29 January 1997 c1132).

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3. The March 1998 Budget and the 1999 Order

In the March 1998 Budget the Labour Government announced that the exemption for sporting services would be amended, to prevent commercial sports clubs artificially restructuring themselves so as to benefit from VAT exemption.27 Briefly, a purportedly non-profit-making club would purchase sporting goods or services from an individual or company connected with the administration of the club. The effect of this arrangement was to shift the profit-making element of the organisation towards the supplier at one remove from the club. The ‘club’ then appeared to operate on a non-profit-making basis (and so enjoyed the VAT exemption), but the supplier (connected to the club) made the profit instead. It was estimated that the annual Exchequer loss from this practice was £5 million, and, if unchecked, the loss would rise to £15 million.28

The Government proposed that the terms of the exemption would be tightened to exclude clubs where profits could be extracted to the benefit of those with a financial interest in the club’s activities. Details were given in a note published by Customs alongside the Budget:

The new conditions tighten the definition of “non-profit making”, with a view to excluding from exemption those clubs, whose profits can be extracted by persons who have a financial interest in the club’s activities. The effect of these conditions is to exclude from exemption, supplies of sporting services by sports clubs, which purchase particular categories of services or goods from, or pay emoluments to, an officer, shadow officer, intermediary or connected person. This means that a sports club will, not be able to exempt any supply of sporting services it makes on or after 18 March 1998, where, at the time of that supply, an officer, shadow officer, intermediary or connected person has:

(a) supplied the club with a lease or similar right over land on or after 1 April 1996, which is used in its sports activities; or

(b) entered into an arrangement to supply the club, after the time of the making of the sports supply, with a lease or similar right over land which is used in its sports activities; or

(c) during the three years immediately prior to the sports supply,

i) supplied sporting facilities, to the club, or

ii) supplied facility management services to the club; or

iii) charged the club above the market rate for any other form of supply; or

iv) been paid any form of emolument by the club; or

(d) entered any form of arrangement to carry out any of she transactions listed in sub-paragraph (c) above, after the sports supply.

27 HM Customs & Excise press release, VAT: crackdown continues on artificial

avoidance, 17 March 1998 28 First Standing Committee on Delegated Legislation, 26 October 1999 c16

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In addition, from 1 January 1999 it will become a condition of exemption that sports clubs apply their profits solely to the maintenance or improvement of the exempt sporting activities. This delay in implementation is designed to allow clubs time to make any necessary constitutional changes.29

A draft order to bring in these changes was laid on 17 March 1998.30 This was strongly criticised for being too wide in scope, and the Government decided that it should be withdrawn.31 At the time the then Paymaster General, Dawn Primarolo (then Financial Secretary) said, “we recognise that a small number of genuine non-profit making clubs have been technically caught by the current drafting of this anti-avoidance measure. This was never the intention and the current order will not now be applied.”32 A revised draft Order was published in January 1999 to come into effect from 1 April 1999. However, following discussion of the draft text with sports bodies,33 Customs made further changes to the text, before the Order was laid before the House on 20 July.

Briefly, the Order tightened the definition of ‘non-profit-making body’ in this context, restricting it to only non-profit making organisations ‘not subject to commercial influence’ who could not ‘distribute any profit which it makes otherwise than to a non-profit making body unless the distribution is made to a member of the body upon the dissolution or winding up of that body’. Any profits made from VAT-exempt supplies had to be used to maintain or improve facilities related with these supplies, or used by a non-profit making body.34

This legislation was debated on 26 October 1999. On this occasion the Minister set out the purpose of this measure as follows:

Dawn Primarolo: The order puts a stop to tax avoidance by commercially driven sports clubs, while fully safeguarding the position of genuine non-profit-making clubs. The avoidance exploits a difference in the VAT treatment of the two sorts of sports clubs, which derives from European law … Until 1994, the United Kingdom treated all subscriptions to sports clubs as taxable at the standard rate but, in response to a legal challenge by the Central Council of Physical Recreation, the previous Government agreed that EC law was being wrongly applied and introduced an exemption for subscriptions to not-for-profit members' clubs. Since then, some profit-making clubs--notably golf clubs--have

29 HM Customs & Excise Budget Notice BN 2/98, VAT: changes to the exemption of

sporting services, 17 March 1998 30 The Value Added Tax (Sport, Sports Competitions and Physical Education) Order SI

1998/764 31 As HM Customs & Excise explained in a Question & Answer briefing published at the

time, “the order will lapse on 24 April and will therefore no longer be law. For the period when it was in force (18 March - 24 April) Customs will, by concession, not enforce it.” HM Customs & Excise, Withdrawal of the Value Added Tax (Sport, Sports Competitions and Physical Education) Order 1998, 9 April 1998

32 HM Customs & Excise press release, Sports clubs: VAT anti-avoidance measure, 9 April 1998

33 These included the Central Council of Physical Recreation, the English Golf Union, the National Golf Clubs’ Advisory Association, and the Chartered Institute of Taxation (HC Deb 27 April 1999 c 125W).

34 SI 1999/1994. Customs published guidance on these provisions in August 1999, and supplementary guidance in October 1999 – which was incorporated in VAT Notice 701/45: VAT & sport, April 2002.

11 VAT & sports clubs

contrived schemes to avoid having to charge VAT by setting up non-profit-making clubs within the club, which they control and from which they extract profits.

It may have come to the notice of members of the Committee that we attempted to tackle that avoidance in an earlier order laid at Budget time last year that followed the Government's anti-avoidance procedure. I must be honest with the Committee and say that we did not apply the order because we realised that it would have had an accidentally adverse effect on genuinely not-for-profit clubs, which would not have been acceptable. Since then, we have spent a long time talking to affected parties to ensure that the wording of the provision is precise and correct. The resulting order has taken some time to draw up because, following correspondence from hon. Members about their golf clubs or golf clubs in their constituencies, I thought it right to make every effort to ensure that the order is correct, so extensive consultation was undertaken.

The order sets new conditions for exemption, which will take effect from 1 January 2000. To be exempt, a club must not distribute its profits except to another non-profit-making body or to its members on winding-up and it must not be subject to commercial influence in a way that permits the extraction of profits. When drafting the order, Customs and Excise took full account of the concerns of sports governing bodies and of the need to protect the competitive position of commercial clubs that account properly for VAT. The order is complex, mainly because of the complexity of the avoidance schemes and our desire to ensure that we close current and future loopholes to prevent abuse of the measure that safeguards the exemption of non-profit-making clubs. As I have said, that has taken some time.

The Minister was asked specifically whether the test of a club being subject to ‘commercial influence’ – and thus, not eligible to claim VAT-exemption – would be met when charging “the reasonable rent of land and facilities for the purpose of playing golf?” She replied by saying the following:

In the order, commercial influence refers to an officer of the club, or someone associated with him or her, who is paid a profit-related salary or leases sports land to the club at a greater than nominal rent, or supplies managerial and administrative services to the club, or makes other supplies to the club at above the open market value. Under pressure from me, Customs and Excise has taken great pains to ensure that guidance given to clubs on interpreting the exemptions is correct. Customs and Excise has stated that, in normal circumstances, it will treat any payment of less than £1,000 as nominal … There is no reason to hold back on tackling avoidance, which currently undermines the position of legitimate commercial clubs. The measures in the order are a sensible and well-targeted response, and have been discussed fully with trade interests.35

Concerns about the attempts by some commercial clubs to avoid VAT resurfaced in 2005. In December that year HM Revenue & Customs restated their position on an avoidance scheme exploited by some clubs, following a judgement by the Court of Appeal that found the scheme

35 First Standing Committee on Delegated Legislation, 26 October 1999 cc 3-4

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failed to change the club’s commercial character for VAT purposes.36 The background to this case was given in a business brief issued at this time:

Messenger Leisure Developments Limited (MLD) is a wholly owned subsidiary within a commercial group of companies. MLD owns and operates a number of golf clubs from which sporting services (such as the right to use golfing facilities) were supplied to the public. MLD claimed that these supplies were exempt from VAT under item 3, group 10, Schedule 9, VAT Act 1994. There are a number of conditions that must be met before sporting services can be exempt. One of these conditions is that such services must be supplied by a non-profit making body. MLD claimed to be a non-profit making body because its Memorandum of Association restricted its ability to distribute profit. The other members of the corporate group had no such restriction and did not claim to be non-profit making bodies.

The Court of Appeal decided on 25 May 2005 that MLD was not to be regarded as a non-profit making body. This was because the building up of reserves in MLD was a clear financial advantage to the group, and hence to its owners, and because the director of MLD had the power to remove the restrictions on distribution of profits set out in the company memorandum, making any surplus available to its owners.

MLD sought leave from the House of Lords to appeal, including in its petition a suggestion that the matter be referred to the European Court of Justice. Leave to appeal was refused on 26 October 2005. The grounds for refusal included a statement that the application of Community law on this point is so obvious as to leave no scope for any reasonable doubt.

In this brief HMRC went on to discuss the implications of the case for commercial clubs:

The House of Lords’ refusal to grant leave to appeal means that the Court of Appeal’s decision represents the final determination of the issues in the MLD case. Plainly, the Court of Appeal’s decision should now determine any other case involving a company which is a member of a commercial group.

HMRC take the view that the MLD precedent is also highly relevant to a number of other cases. The EC law, as set out in the case of Kennemer Golf and Country Club, is clear. Companies which are set up in a commercial context, with the aim of benefiting from the VAT exemption, do not qualify as non-profit-making bodies, even if their constitution precludes them from distributing profit. It is normally clear that a company is operating in a commercial context if it is a subsidiary within a commercial group. However, there are in addition many examples where a purported non-profit making company operates in a commercial context, without being a subsidiary of another company.

In MLD the main witness’s evidence, to the effect that he was not interested in extracting profit from the business, was not challenged, and did not need to be, given the existence of the commercial group. It goes without saying that, in any case not involving a subsidiary within a commercial group, any claims to the effect that commercial parties were not intended to benefit

36 “Law report: Commercial purpose removes VAT exemption”, Times, 14 June 2005.

See also, HM Revenue & Customs press notice NAT 53/05, 1 December 2005.

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from the arrangements in question will not be accepted by HMRC without challenge.

Businesses affected by the MLD decision

In HMRC’s view it is now clear that any company which is precluded from distributing profit, but whose function is nevertheless to create VAT exemption in the context of a wider commercial undertaking, is not a non-profit making body for VAT purposes. It follows that such a company is not entitled to claim the VAT exemption which is directed at such bodies. Any such company, which HMRC has already decided is not a non-profit making body, should now consider its position in light of the fact that the MLD case has been finally determined in HMRC’s favour, and the EC law is clear.37

37 HMRC Business Brief BB22/05, 2 December 2005. See also, Tolley’s VAT 2014-15 2nd

ed, para 57.10

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4. Proprietary (profit-making) clubs and members (non-profit-making) clubs

4.1 Arguments for extending the scope of VAT-exemption

Following these changes to VAT law, many commercial clubs lobbied for exemption to be extended to cover all sports clubs. Writing in Taxation, one practitioner suggested that golf club members had found themselves taxed or exempted under an arbitrary test of whether their golf club was well-established or recently set up. “New clubs were normally owned by proprietors and commercially operated, whereas old clubs were normally operated by members’ committees … as a result of the opportunity for exemption, some organisations … have restructured their affairs. The restructure requires that the members receive their sporting supply from a non-profit making organisation; eg, trustees, committee or companies limited by guarantee, and the non-profit organisation buys in the wherewithal to provide the supply.”38

Some argued that the distinction made between golf clubs discriminated in favour of those players who could afford to belong to older, members clubs:

The country’s 800 golf course proprietors, a third of the clubs in Britain, are angry that because they are rated as businesses they have to pay VAT on members’ subscriptions. But private members’ clubs are exempt from VAT, saving an average of £40,000 a year, despite the fact that many act as commercial enterprises and give their profits back to members by artificially keeping down subscriptions …

Colin Hegarty, director of the independent Golf Research Group, says that aspiring newcomers to golf face a double handicap. Long waiting lists at the established private members’ clubs force them to join the new privately-owned clubs, which means they face paying about another £100 on subscriptions to cover VAT - and risk the club folding because of spiralling costs … “The private members’ clubs are depressing the market thanks to their artificial subsidy and driving the proprietary clubs out of business … The man in the street cannot play golf because the fat cats have the game stitched up.”39

The issue was raised in a number of PQs at this time, though the Labour Government did not indicate it was willing to consider a further change to the law:

Mr. Letwin: To ask the Chancellor of the Exchequer if he will make a statement on VAT treatment of subscriptions for (a) private golf clubs and (b) proprietary clubs.

38 “Sporting chance”, Taxation, 28 May 1998 39 “Tax perk for fat cats splits golf”, Mail on Sunday, 24 May 1998

15 VAT & sports clubs

Dawn Primarolo: Playing subscriptions to non-profit making sports clubs are exempt from VAT. Subscriptions to proprietary clubs are liable to VAT at 17.5 per cent.40

As noted above, the exemption of sporting services provided by non-profit-making clubs is provided for in EU VAT law. Initially this provision was made by Article 13A(1)m of the sixth VAT directive, which required exemption of “certain services closely linked to sport or physical education supplied by non-profit-making organisations to persons taking part in sport or physical education.” Article 13A(2)(a) allowed Member States, at their discretion, to extend the exemption of these, and other specified supplies, when made by “bodies other than those governed by public law”; however, this is subject in each individual case to one of a number of conditions:

• They shall not systematically aim to make a profit, but any profits nevertheless arising shall not be distributed, but shall be assigned to the continuance or improvement of the services supplied,

• They shall be managed and administered on an essentially voluntary basis by persons who have no direct or indirect interest, either themselves or through intermediaries, in the results of the activities concerned,

• They shall charge prices approved by the public authorities or which do not exceed such approved prices or, in respect of those services not subject to approval, prices lower than those charged for similar services by commercial enterprises subject to VAT.

• Exemption of the services concerned shall not be likely to create distortions of competition such as to place at a disadvantage commercial enterprises liable to VAT.41

In addition, Article 13A(2)(b) specified that, in these circumstances, national provision for exemption could not extend to goods and services if “the supply is not essential to the transactions exempted”, or “the basic purpose is to obtain additional income for the organization by carrying out transactions which are in direct competition with those of commercial enterprises liable for value added tax.”42

In May 1998 the European Court of Justice ruled that Spanish VAT law contravened these provisions, in allowing the scope of exemption to include private sports bodies whose membership fees fell below a specified threshold.43 Part of the Court’s ruling is reproduced below (emphasis added):

The Spanish Government … argues, concerning the exemption of supplies of services referred to in Article 13(A)(1)(m), that, unlike other exemptions envisaged by that provision, letter (m) provides

40 HC Deb 5 November 1998 c692W. At this time the standard rate of VAT was

17.5%; it has been 20% since 4 January 2011. 41 Equivalent provision is now made in Articles 132(1)(m) and Article 133 of Council

Directive 2006/112/EC. The wording of the latter, with regard to the tests for extending exemption, in certain cases, to ‘bodies other than those governed by public law’ is essentially unchanged.

42 Equivalent provision is now made in Article 134 of Council Directive 2006/112/EC 43 Admission or entry fees of PTA 265,000, and monthly periodic fees of PTA 4,000.

The relevant Spanish VAT legislation is Article 20 of Law No 37 of 28 December 1992 on Value Added Tax (‘Law No 37/92’), as amended by Article 13 of Law No 42 of 30 December 1994 (‘Law No 42/94’).

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for the exemption of ‘certain’ supplies of services. In its submission, that permits Member States to limit the scope of Article 13(A)(1)(m), not only by expressly excluding certain services provided by sports establishments from the exemption, but also by applying ‘other criteria’, such as the amount of the consideration for the services in question.

On that point, it is clear from Article 13(A)(1)(m) of the Sixth Directive that the exemption in question concerns supplies of services closely linked to sport or physical education provided by non-profit-making bodies. It is undisputed that, under the Spanish legislation, the exemption envisaged under Article 13(A)(1)(m) of the Sixth Directive is granted only to private sports bodies or establishments of a social nature which charge membership fees not exceeding certain amounts.

To apply the criterion of the amount of membership fees may lead to results contrary to Article 13(A)(1)(m) … To apply such a criterion may result, first, in a non-profit-making body being excluded from the benefit of the exemption provided for by the provision and, secondly, in a profit-making body being able to benefit from it. Moreover, there is nothing in that provision to the effect that a Member State, when granting an exemption for a certain supply of services closely linked to sport or physical education provided by non-profit-making bodies, may make that exemption subject to any conditions other than those laid down in Article 13(A)(2).

It follows that the limitation of the exemption for supplies of services closely linked to sport or physical education to private sports bodies or establishments of a social nature whose membership fees do not exceed a certain amount is contrary to Article 13(A)(1)(m) of the Sixth Directive.44

Following the Court’s judgement there was speculation that any move to extend VAT exemption to proprietary golf clubs could be contrary to European law. In January 1999 the Labour Government confirmed that Customs would discuss the implications of the judgement with the European Commission.45 The issue came up in the Commons debate of the 1999 Order, when the Minister, Ms Primarolo, took the view that distortion of competition was a quite separate matter to avoidance, and that the legislation should only deal with the latter:

I readily acknowledge that many commercial golf clubs feel that they suffer unfair competition from local private members' clubs, many of which are large-scale organisations. We treat those concerns seriously, but the provisions in European law that allow us to counteract distortions are not straightforward …

We received the decision of the European Court of Justice on 7 May … The case clearly features in the discussions between Customs & Excise and the Commission on how to explore the scope for resolving distortions … Negotiations were led by senior officials of Customs and Excise … We have also had discussions with other member states and know of at least two who are prepared to support our argument.

The question of distortion is separate from the order but, instead of providing a meaningless time scale, I am prepared to keep the

44 Case C-124/96, Judgement of the Court, Sixth Chamber, of 7 May 1998. 45 HC Deb 13 January 1999 c197W

17 VAT & sports clubs

hon. Members for West Dorset and for Kingston and Surbiton46 informed as our discussions proceed. They will accept that there are more important matters on the Government's agenda--we are not bargaining or trading in our discussions in Europe--and we have a lot of work on at present. However, if I undertake to keep the hon. Gentlemen informed, I believe that that will go some way towards showing that we are taking the question of distortion seriously.47

Subsequently, in answer to a PQ in 2011, the Coalition Government reaffirmed that there was no scope for extending the scope of VAT-exemption in this way:

Bob Russell: To ask the Chancellor of the Exchequer if he will amend the Value Added Tax regulations so that charges levied on golf clubs operated by proprietors are the same as those levied on non-profit making clubs; and if he will make a statement.

Mr Hoban: The Principal VAT directive, which governs the application of VAT in the European Union, requires member states to apply a VAT exemption to certain activities in the public interest, including supplies of sporting services by non-profit making organisations.

Subscription fees charged by non-profit-making golf clubs are therefore exempt from VAT. The exemption does not extend to subscription fees received by proprietary (profit-making) clubs nor is there any scope to extend it in this way.48

As discussed in the next section of this note, there has been case law in this area, though in relation to the way that members clubs charge non-members for using their facilities – ‘green fees’, as they are known. When the wider question of commercial clubs was raised in a PQ in January 2015, the Treasury Minister, David Gauke, simply referred to HMRC’s position on this separate, if related, issue.49

4.2 Green fees charged by members clubs to non-members

More recently the compatibility of the current exemption of non-profit-making clubs’ services with the provisions for its exemption in EU VAT law has been the subject of another judgement by the European Court, with implications for many golf clubs.

As noted above, group 10 to schedule 9 of the VAT Act 1994 provides for the exemption of sporting services supplied by a non-profit-making body. Until recently item 3 to group 10 read: “the supply by an eligible body to an individual, except, where the body operates a membership scheme, an individual who is not a member, of services closely linked

46 Oliver Letwin MP and Edward Davey MP, the Opposition’s two spokespersons at this

time. 47 First Standing Committee on Delegated Legislation, 26 October 1999 c4, c17 48 HC Deb 8 September 2011 c794W. In answer to a subsequent PQ the Government

stated that it had not made any assessment “of the effect on competition between proprietary and members' golf clubs of the VAT rating applicable to proprietary golf club membership fees” (HC Deb 9 September 2011 c862W).

49 PQ220953, 22 January 2015

Number 01052, 7 March 2017 18

with and essential to sport or physical education in which the individual is taking part.”50 HM Revenue & Customs’ view has been that when a non-profit-making golf club charges access charges to non-members using its course - ‘green fees’ - it should charge VAT at the standard rate.51

In 2009 the Bridport & West Dorset Golf Club challenged this, on the grounds that these supplies should be VAT-exempt under Council Directive 2006/112/EC.52 Although HMRC’s approach had been upheld in an earlier tribunal case, the tribunal found that the scope of the exemption as provided for in UK law did not properly implement the terms of the Directive. As HMRC noted in a brief on the decision:

The tribunal concluded that by restricting the exemption to supplies made to members, the UK law was acting contrary to the purpose of the exemption in the Principal VAT Directive (or, in other words, had failed to “correctly implement its terms”). It was not persuaded by HMRC’s argument that the exclusion applied to non-members was justified on grounds that it reduced distortion of competition. As a result, it agreed with the golf club that supplies to non-members of green fees were exempt from VAT.53

The implications of this case were raised at this time in a PQ:

Gordon Henderson: To ask the Chancellor of the Exchequer for what reasons private golf courses are exempt from value added tax on (a) subscription fees and (b) green fees.

Mr Gauke: The principal VAT directive, which governs the application of VAT in the European Union, requires member states to apply a VAT exemption to certain activities in the public interest, including supplies of sporting services by non-profit making organisations. Subscription fees charged by non-profit-making golf clubs are therefore exempt from VAT. The exemption does not extend to subscription fees received by proprietary (profit-making) clubs.

HMRC consider that, under UK law, green fees paid by non-members to both non-profit-making and proprietary clubs are taxable. In a recent decision, the First Tier Tribunal found that green fees paid by non-members to non-profit making golf clubs were exempt. HMRC has been given leave to appeal this decision to the Upper Tier Tribunal and businesses should continue to treat these green fees as taxable pending a decision of the Upper Tier Tribunal.54

On HMRC’s appeal, the Upper Tribunal referred the issue to the ECJ, as explained in a second brief published by the department:

The appeal was heard on 23-25 July 2012 and The Hon Mrs Justice Proudman handed down her decision on 30 July 2012.

Mrs Justice Proudman decided that in view of the importance of the issue for the Community in general and the number of cases

50 As discussed above, in 1999 the wording of group 10 was amended – by SI

1999/1994 – to clarify which non-profit making bodies would qualify under these provisions. This inserted a new term – ‘eligible body’ – which notes to this group then defined.

51 VAT Notice 701/45, August 2011 para 3.4.2 52 For a short discussion of the case see, Tolley’s VAT 2016/17 2nd ed, para 57.11 53 HMRC VAT Brief 30/11, 27 July 2011 54 HC Deb 6 September 2011 c402W

19 VAT & sports clubs

that are affected by the decision the issue would be referred to the European Court of Justice (ECJ). The issues to be addressed by the ECJ relate to the interpretation of Articles 134(b) and 133(d) of the Principal VAT Directive. It is HMRC's view that green fees charged by members' clubs cannot fall within the VAT exemption because in their view, these transactions are additional income which is obtained in direct competition with commercial enterprises liable for VAT.55

As noted, Member States may exempt sporting services made by “bodies other than those governed by public law” under a number of conditions. Supplies may not be granted exemption where “the basic purpose of the supply is to obtain additional income for the organization by carrying out transactions which are in direct competition with those of commercial enterprises liable for value added tax.” In addition, exemption is precluded if it is “likely to create distortions of competition such as to place at a disadvantage commercial enterprises liable to VAT.”56

In December 2013 the Court ruled that neither of these conditions allowed UK law to exclude green fees charged by members’ clubs to non-members from the existing exemption.57

Following this decision, there was speculation that HMRC would have to make compensation payments to members clubs, equivalent to the VAT they will have charged non-members.58 On 25 June 2014 HMRC announced its interpretation of the judgement, its intention to change the law, and its approach to claims from clubs for the recovery of over-paid VAT. An extract from this brief is reproduced below:

Implications of the Judgment

As a result of the CJEU judgment, HMRC accepts 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. This is provided that the services are closely linked and essential to sport and are made to persons taking part in sport. HMRC will legislate by 1 January 2015 to reflect this. HMRC will ensure any future changes comply with the decision of the CJEU.

Claims for Overpaid VAT

HMRC intends to deal in two phases with claims for the repayment of overpaid tax for previous periods:

I. Phase 1. Members' clubs that decide to reimburse non-members who were incorrectly charged VAT on sporting services supplied to them (including members' golf clubs that incorrectly charged VAT on green fees) and will adopt the reimbursement arrangements explained in Sections 9 & 10 of Notice No. 700/45 'How to correct VAT errors and make adjustments or claims'.

Where a members' golf club or other non-profit making sports club considers it has overpaid VAT on sports related services it

55 HMRC VAT Brief 25/12, 24 August 2012 56 Under Article 134(b) and Article 133(d) of Council Directive 2006/112/EC. 57 Case 495/12 of 19 December 2013 58 “Golf clubs could reclaim VAT totalling thousands of pounds after EU ruling”,

Guardian, 14 January 2014; England Golf press notice, HMRC vs. Bridport & West Dorset Golf Club Judgement, 19 December 2013. See also, HC Deb 27 March 2014 c343W & HC Deb 7 April 2014 c22W.

Number 01052, 7 March 2017 20

may make a claim to HMRC under section 80 of the VAT Act 1994 for repayment of VAT incorrectly accounted for. Such claims are subject to the conditions set out in Notice 700/45.

This means that clubs will need to demonstrate that they have made arrangements to reimburse the VAT to non-members who actually paid it, and make a legally binding commitment to do so in a timely manner …

II. Phase 2. Clubs that do not adopt reimbursement arrangements

HMRC are examining the scope for restricting repayments to clubs not making arrangements to reimburse the paying non-members to avoid the unjust enrichment of members' clubs. Further advice will be issued on these claims after a conclusion has been reached on this point.

Existing Claims

Where a submitted claim has already been rejected by HMRC and the claimant has not appealed, that claim cannot now be resubmitted. Any claims submitted now will be a new claim subject to the four-year time limit. Rejected claims that were appealed to the First Tier Tribunal, however, are still open …

New Claims

All new claims will be subject to the four-year time limit in section 80(4) of the VAT Act 1994. Claims made should be adjusted for any amounts due to set-off under section 81(3) of the VAT Act 1994 (outstanding debts, assessments, etc.) and section 130 of the Finance Act 2008 (outstanding debts under any other head of taxation). In particular, claimants will need to adjust for any resultant over claim of input tax by application of the appropriate partial exemption calculation. In some cases, it may be necessary to revisit Capital Goods Scheme adjustments.

All Claims (whether New or Existing claims)

Finally, it should be noted that where amounts of overpaid output tax are repaid and not re-imbursed to affected customers, there may be direct tax implications. For example, trading income from non-members is taxable and therefore any surplus of non-member income that remains after the deduction of relevant expenses is liable to Corporation Tax.59

In December 2014 the Government brought forward secondary legislation to amend the exemption of sporting services; this removed the requirement that VAT-exempt supplies could only be made to members, if the club or organisation concerned had a membership scheme.60 This took effect from 1 January 2015.61

In February 2015 HM Revenue & Customs issued a second, detailed brief to answer a series of questions as to how clubs should make claims for overpaid VAT, following a review of the claims it had already received.62 This is not reproduced in full here, but a number of points

59 HMRC VAT Brief 25/14, 25 June 2014 60 Under SI 2014/3185, item 3 to Group 10 was amended to read, “the supply by an

eligible body to an individual, of services closely linked with and essential to sport or physical education in which the individual is taking part.” Note 2 to Group 10 had specified that, in this context, members had to have membership of at least 3 months. The Order removed this provision from the legislation.

61 For guidance see, VAT Notice 701/45: VAT & sport, May 2016 62 HMRC, VAT Information Sheet 01/15, 9 February 2015

21 VAT & sports clubs

made in the brief are of particular note. First, although the Bridport appeal concerned green fees charged by a golf club, HMRC noted that, “other types of non-profit making members’ sports clubs may also be affected by this judgement.”63 Second, it underlined that those clubs making a new claim for overpaid VAT would be subject to a four year time limit. The brief sets out how time limits apply both to existing and new claims, as follows:

Time limits on claims

For claims made before 1 April 2009, the earliest period you could have claimed for must have ended no earlier than 3 years before the date of your claim. For example, if your claim was submitted on 31 March 2009, the earliest period you could have claimed for must have ended on or after 31 March 2006.

Claims made between 1 April 2009 and 31 March 2010 inclusive were subject to transitional arrangements which increased the time limit from 3 to 4 years. In such cases, you could therefore have claimed for more than 3 years, provided that the earliest claim period ended on or after 1 April 2006.

For claims made on or after 1 April 2010, a maximum of 4 years can be claimed. The earliest period you can claim for must have ended no earlier than 4 years before the date of your claim. For example, if you submit a claim on 31 March 2015, the earliest period you can claim for must have ended on or after 31 March 2011.

‘Fleming’ claims

The one exception for claims made before 1 April 2009 is ‘Fleming’ claims for underclaimed or overpaid VAT potentially going back as far as the inception of VAT in 1973. This exception resulted from the House of Lords judgements in the linked cases of Fleming and Conde Nast which concerned the way the 3 year time limit on making claims had been introduced. As the deadline for submitting Fleming claims was 31 March 2009, any claim made after this date cannot be a Fleming claim.

In the case of Fleming claims, HMRC maintains that overpaid VAT (output tax) was capped at periods ending on or before 4 December 1996. Therefore, any claims for periods which ended after 4 December 1996 will only be considered if the claim for those periods was made within the 3 or 4 year time limit referred to in paragraph 2.2 above. HMRC also maintains that, when the exemption for sporting activities was first implemented in 1993, this only allowed the exemption to be backdated to 1 January 1990. Therefore, HMRC will not accept any claims for amounts of overpaid VAT prior to 1 January 1990.64

Third, as noted in HMRC’s earlier briefing, clubs would have a choice as to whether, when they make a claim, they undertake to reimburse their customers for the VAT they had been overcharged. The revenue authorities may challenge a claim for a VAT repayment if it would give rise to ‘unjust enrichment’ – that is, if the trader making the claim:

63 op.cit. para 1.3 64 op.cit. para 2.2-3. The general time limit for making claims for VAT repayments was

increased from 3 to 4 years, from 1 April 2009 (see, Tolley’s VAT 2016-17 2nd ed, para 51.11)

Number 01052, 7 March 2017 22

• has charged VAT to his customers that he ought not have charged

• has passed the economic burden of the wrongly charged VAT on to his customers

• has suffered no loss or damage as a result of having passed the mistaken charge to his customers, and

• is unable or unwilling to reimburse his customers with any amounts paid to him by HMRC.65

These provisions are set out in s80(3a)-(3C) of VATA 1994; further guidance on their operation is given in HMRC’s VAT Refunds Manual.66 HMRC will not challenge this type of claim if traders comply with certain specified arrangements for ensuring customers were reimbursed properly. In their brief issued in February 2015, HMRC said they would set out their view on unjust enrichment with regard to these claims in a future brief:

HMRC will meet eligible claims (‘Phase 1’ claims in Revenue and Customs Brief 25/2014) provided that claimants have undertaken to reimburse their customers who bore the burden of the tax and all the necessary conditions are met. You should be aware that HMRC still reserves the right to examine all claims for accuracy and to ensure that any necessary amendments have been made including those referred to in this information sheet.

Claimants not adopting the reimbursement arrangements

Where claimants have not undertaken to reimburse their customers, HMRC is still examining the scope for restricting payments to avoid those clubs being ‘unjustly enriched’ by any payments made …

HMRC are also still considering whether, in certain circumstances, unjust enrichment can be invoked to a similar level across all similar claims, or if each claim must be looked at on its own merits. No conclusion has yet been reached on this.

A further Revenue and Customs Brief will be issued shortly which will provide detailed information of the position HMRC expects to adopt in respect of unjust enrichment and how claimants not adopting the reimbursement arrangements should proceed with their claims.67

On 2 November 2015 HMRC published an update on this issue; an extract is reproduced below:

Unjust enrichment update

HMRC’s review found that if claims were credited in full some clubs would be unjustly enriched by 50% and others by 67%. Some clubs disagreed with the conclusions of the review and with HMRC’s position that corporate days and supplies to tour operators are standard rated, as outlined in VAT Information

65 HMRC, VAT Notice 700/45: how to correct VAT errors and make adjustments or

claims, July 2013 para 9.1. The rules draw on an ECJ judgement (Case C-192/95 of 14 January 1997) that although taxes/duties should be refunded if paid contrary to EU law, this need not happen if the claimant would be unjustly enriched (see, Tolley’s VAT 2016/17 2nd ed, para 51.10).

66 HMRC’s Manual is online; unjust enrichment is covered in paras VR3000-57100. 67 VAT Information Sheet 01/15, 9 February 2015 para 8

23 VAT & sports clubs

Sheet 01/15 ... These issues have recently been heard by the First Tier Tribunal (FTT).

Although the question of unjust enrichment is still before the courts, HMRC has decided to pay or credit, subject to conditions (see below), 50% or 33% (depending on the golf club) of the value of valid claims ahead of any court decision. HMRC will credit a claimant’s VAT account if there is an outstanding debt.

The amount repaid or credited to each claimant will depend on the level of green fee charges. Where a golf club charges any green fee now or during the claim period, of over £100 per person for a round of golf, at any time of the year, HMRC will repay or credit 33% of its VAT Information Sheet 01/15 compliant claim. All other claimants will receive 50% of their VAT Information Sheet 01/15 compliant claim. HMRC considers the level of green fees is representative of a club’s ability to pass on the VAT cost to its customers.

Next steps

So that HMRC may pay or credit the appropriate amount to each club, please:

• notify HMRC that you have checked and where necessary adjusted your claims in line with VAT Information Sheet 01/15 - this helps minimise any errors and we have found a high level of error in claims checked

• confirm if your green fees are less than, or over, £100 per person per round

• confirm whether or not you would like an interim payment or credit on your account - if you have not checked or adjusted your claim because you disagree with the policy detailed in VAT Information Sheet 01/15, HMRC will not consider your claim until the FTT issues a decision …

If a club does not pass on to the affected customers the repaid or credited amounts of output tax there may be direct tax implications. For example, trading income from non-members is taxable. Any surplus of non-member income that remains after deduction of relevant expenses is liable to Corporation Tax.68

In December 2015 the First Tier Tribunal considered an appeal brought by three golf clubs regarding HMRC’s position on unjust enrichment, and decided that, contrary to HMRC’s decision, 90% of the amounts claimed by the clubs should be repaid.69 Following this ruling in May 2016 HMRC published a further brief, acknowledging the decision and stating that it would not be appealed.70 An extract is reproduced below:

Background

The Court of Justice of the European Union found, in the case of Bridport and West Dorset golf club, that the UK had incorrectly applied VAT to certain supplies made to visitors of non-profit making clubs. HMRC had subsequently denied repayment of VAT

68 HMRC Brief 19(2015), 2 November 2015. See also, “VAT on green fees”, Tax

Journal, 13 November 2015 69 The Berkshire Golf Club and others v HMRC [2015] UKFTT627 (TC) (TC04774) see

also, “Berkshire Golf Club and the economics of unjust enrichment”, Tax Journal, 22 January 2016, and, Time to call it a day”, Taxation, 2 March 2016

70 “HMRC will refund golf clubs’ VAT”, Taxation, 2 May 2016

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claims for overpaid VAT on the basis they would be unjustly enriched.

A number of clubs challenged HMRC’s refusal to pay out claims and appealed to the FTT. While the FTT found that the clubs would be unjustly enriched if HMRC paid their claims in full, it was not to the extent HMRC had considered. 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.

Other issues considered by the FTT

The FTT also considered the VAT treatment of corporate days and supplies to tour operators. It found that both supplies were taxable at the standard rate of VAT. It also found, on the facts of the cases, that VAT on golf course maintenance costs was an overhead of the clubs and was to be apportioned in accordance with a partial exemption method as appropriate. This may not always be the case, as the onus is on the club to demonstrate a link between its taxable activities and course costs, in order for such costs to be treated as residual.

The FTT determined that corporate days (supplies made to businesses who use them for their own purposes and so are the true beneficiaries), include green fees and any ancillary supplies (such as catering) supplied to the business concerned, irrespective of how they are constituted. Some clubs may refer to these taxable supplies as golf society days or by some other description, which is different from the VAT exempt society days described in VAT Information Sheet 01/15.

Making a claim

All claimants must confirm that their claims have been adjusted in accordance with VAT Information Sheet 01/15. All claims must be sent to: VAT Bridport Claims SO483 , PO Box 200, BOOTLE , L69 9AH

New claims

All new claims will be subject to the 4 year time limit in section 80(4) of the VAT Act 1994.71

71 HMRC Brief 10 (2016), 4 May 2016

BRIEFING PAPER Number 01052, 7 March 2017

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