The latest stage of the HMRC vs Bridport and West Dorset GC VAT case took place at the Royal Courts of Justice in London on 22 January 2015. No legal arguments were heard, but the case management hearing had been requested by KPMG, who are tackling this test case on behalf of a number of golf clubs, after HMRC requested a delay to continue to study their argument against repayment on the basis of unjust enrichment.
The hearing set out a timescale for the eventual resolution of the case, and HMRC also agreed to make interim payments of up to 50% of overpaid VAT on non-member green fees at not for profit golf clubs.
HMRC will issue instructions on or before 9th February and, subject to verification of their claims, clubs should receive an interim payment by April this year. Meanwhile, economists and lawyers for both sides will be arguing the remaining value of claims, and if no agreement is reached a further High Court hearing will be scheduled in the summer.
All clubs who have submitted a claim have been advised by KPMG to “top up” their claims to prevent being caught by capping legislation.
KPMG’s latest update to clubs – 29 January 2015
KPMG have been liaising with HMRC both prior to and subsequent to the hearing to agree and finalise the directions which were sent to the Tribunal on 23 January. The Tribunal is expected to formalise these directions shortly.
As outlined in our previous update, KPMG consider that the economic burden of the VAT charge is borne exclusively, if not all but exclusively, by the clubs. HMRC however have confirmed that they wish to invoke a defence of partial unjust enrichment and the Tribunal has agreed for the matter to be listed for a hearing . We expect this will take place in June/July 2015 and will provide an update once this date is known.
We have agreed with HMRC that KPMG’s economists will liaise directly with HMRC’s economists in the course of the coming weeks to confirm points of agreement and points still in dispute with regard to unjust enrichment.
HMRC will issue an Information Sheet by 9 February. This will provide guidance on the issues that need to be addressed before HMRC will agree the value of claims. We will meet HMRC to discuss the KPMG claims methodology later in February and anticipate that HMRC will then verify a sample of claims.
HMRC will apply a provisional unjust enrichment restriction to the claims and make an interim payment plus simple interest. For the majority of clubs, this restriction will be 50% of the value of the final claim. For a small number of clubs there will be a restriction of 67% of the final claim. Whether a club will receive 50% or 67% depends on a number of factors but the higher restriction is likely to be associated with the highest green fees and thereby highest claim value. HMRC will have 30 days to make the interim payment once the final claim amount is agreed.
We will publish further updates when we receive them from HMRC or KPMG.
At BTME 2015, KPMG VAT Director Paul Stewart discussed the issue of VAT on green fees for proprietary golf clubs:
Image: KPMG VAT Director Paul Stewart discuss the case at a GCMA Educational Seminar at BTME 2015
By Mike Hyde