First Tier Tribunal Decision on VAT on Visitor Green Fees

The The Berkshire Golf Club and Others – Final 7 Dember 2015 in the Bridport Claim has now been announced. The hearings related to the amount of unjust enrichment arising from the VAT repayments and also other technical VAT matters.

The Tribunal has now ruled that private members golf clubs had borne 90% of the cost of the VAT charge and therefore the amount that green fee claims should be restricted by is only 10% of the VAT over declared. During the hearing, HMRC argued that the restriction should be 50%/67% (as published in Business Brief 19/2015) whereas KPMG argued that the amount claims should be restricted by is 5% of the VAT overpaid. The Tribunal decided that there was no basis on which to distinguish between different clubs, and that all clubs had borne 90% of the cost of the VAT charge.

This is a positive outcome and the Tribunal have validated many of the arguments advanced by KPMG’s economist and legal team.

There were other VAT technical matters considered by the Tribunal relating to aspects of HMRC’s guidance contained in  VAT Information Sheet 01/15.

With regard to course maintenance VAT the Tribunal agreed with KPMG’s arguments that if a club does not have corporate green fee income but does have buggy hire or tee advertising income, both of which are standard rated, this was sufficient for VAT on course maintenance costs to continue to be treated as ‘residual’ and eligible for partial recovery calculated by reference to a partial exemption method.

KPMG also argued that where a green fee relating to individuals playing golf was paid for on a corporate credit card this should still be treated as VAT exempt.  KPMG had previously accepted that the green fee element of traditional corporate day packages should be treated as standard rated. Unfortunately, the Tribunal agreed with HMRC on this point and decided that in the event that green fees are paid by a corporate rather than an individual these are subject to VAT at the standard rate.

In addition, the Tribunal ruled that green fees charged directly to Tour Operators are subject to VAT at the standard rate. This only includes supplies where the tour operator is billed directly, i.e. buys in the green fee and supplies it on as principal and does not include green fees charged to individuals via a ‘true’ agent (for example tee times websites).

HMRC have now a relatively short time to decide whether or not to appeal the decision, and must ask the First Tier Tribunal for permission to appeal within 56 days of the release of the judgment. If the First Tier Tribunal refuses, then HMRC may ask the Upper Tribunal for permission within 1 month of that refusal. KPMG’s current view is that they will not be appealing against the findings of the Tribunal.

Clubs should now await contact from KPMG, or if not with KPMG their agent, who will be gathering further information on corporate and tour operator green fees and course maintenance VAT and also adjusting the claims to take into account the unjust enrichment restriction.


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