HM Revenue and Customs Brief 30/11
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Issued 27 July 2011
VAT: HMRC's position following the First-Tier Tribunal
decision in the case of The Bridport and West Dorset Golf Club Limited
This brief explains HM Revenue & Customs' (HMRC's)
position following the First-Tier Tribunal decision in the case of The
Bridport and West Dorset Golf Club case (TC/2009/122260). The appeal
concerned the VAT liability of green fees charged by the golf club to
Bridport and West Dorset Golf Club is a non-profit making
members’ golf club. The issue before the tribunal was whether the
charges, known as green fees, made by the club to visiting non-members
in return for the right to play golf are exempt from VAT or, as HMRC
maintained, standard rated.
Under VATA 1994 Schedule 9 Group 10 Item 3, supplies by
non-profit making bodies of services closely linked and essential to
sport to individuals taking part in sport are exempt from VAT. However,
where the body operates a membership scheme, any supplies to
individuals who are not members are excluded from the exemption and
subject to VAT.
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.
HMRC believes that the tribunal has erred in interpreting EU
law and remains of the view that where clubs that run membership
schemes make charges to non-members for the use of certain sporting
facilities, such as green fees, the charges are standard rated. They
have, as a result, sought permission to appeal to the Upper Tier
Decisions of the First-Tier Tribunal are binding only on the
parties to the decision. Consequently, we do not propose to pay other
claims already submitted and we are not inviting new claims in the wake
of this decision. Any claims that are submitted will be rejected.
HMRC consider that businesses should continue to follow the
guidance in Notice 701/45 Sport and standard-rate these types of
supplies made to non-members of a membership club. Should any golf
clubs decide to exempt their green fees on the basis of the First-Tier
Tribunal's decision, HMRC will assess the underdeclared tax and enforce
the assessments. Penalties may also be applicable in such cases.
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Article Published/Sorted/Amended on Scopulus 2011-07-28 16:18:55 in Tax Articles