HM Revenue and Customs Brief 10/16 - Unjust enrichment: non-profit making sports club
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First published: 4 May 2016
of this brief
This brief provides information on how HM Revenue and Customs
will treat claims for VAT refunds from sports clubs following the First
Tier Tribunal (FTT)
decision in Berkshire and Others handed down on 07 December 2015. This
brief cancels Revenue and Customs Brief 25/14 and 19/15.
Membersí golf clubs and other non-profit making sports clubs
and their advisers.
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
had subsequently denied repayment of VAT claims for overpaid VAT on the
basis they would be unjustly enriched.
A number of clubs challenged HMRCís 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.
4. Other issues
considered by 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.
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.
5. 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
6. New claims
All new claims will be subject to the 4 year time limit in
section 80(4) of the VAT Act 1994.
7. Return adjustments
Membersí clubs with over declarations of output tax within
certain monetary limits may wish to correct any errors on their VAT
returns rather than submit a formal claim under section 80 VATA 94 to HMRC. However,
in doing so they would not receive any interest. Further information on
the monetary limits and which returns may be adjusted is available in
VAT Notice 700/45: How to correct VAT errors and make adjustments and
In circumstances where membersí clubs have not taken due care
in submitting valid claims, they may be charged a penalty in relation
to prescribed accounting periods starting on or after 1 April 2008,
where the return due date is 1 April 2009 or later. For example, a club
may incur a penalty if, as a result of a failure to take reasonable
care, it shows too little tax due or claims a repayment that is too
large on its VAT return.
9. Implications on
Where amounts of overpaid output tax are repaid and not
reimbursed to customers who bore the burden of the tax, there may be
direct tax implications. For example, any surplus of trading income
from non-members that remains after the deduction of relevant expenses
is taxable, for Corporation Tax purposes and a liability may arise.
About the Author
© Crown Copyright 2016.
A licence is needed to reproduce this article and has been republished
for educational / informational purposes only. Article reproduced by
permission of HM Revenue & Customs.
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Article Published/Sorted/Amended on Scopulus 2016-05-05 00:00:00 in Tax Articles