HM Revenue and Customs Brief 25/14 - European Court VAT Sports Services
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Issued 25 June 2014
VAT: Supplies of sporting services by non-profit making
bodies – implications of the judgment by the European Court in Bridport
and West Dorset Golf Club Ltd (C-495/12)
Purpose of this brief
This brief provides an update on HM Revenue & Customs
(HMRC) policy following the decision by the Court of Justice of the
European Union in Bridport & West Dorset Golf Club in December
2013. It explains HMRC's:
- interpretation of the judgment and the subsequent change
to the policy
- approach to repayment claims by non-profit making golf
clubs and other members' sports clubs in respect of VAT incorrectly
charged to non-members
It also updates the position set out in Revenue &
Customs Brief 30/11 issued 27 July 2011.
Members' golf clubs and other non-profit making sports clubs
and their advisers.
Bridport and West Dorset Golf Club is a non-profit making
members' golf club. Under EU Law supplies by non-profit making bodies
of services closely linked and essential to sport to persons taking
part in sport are exempt from VAT. In UK law, where the body operates a
membership scheme, any supplies to individuals who are not members are
excluded from the exemption on the basis that the fees received
represent 'additional income' for the purposes of EU Law.
The Bridport appeal concerned green fees paid by visitors
(non-members) -Bridport had made a claim for repayment of VAT on green
fees arguing that the exclusion of supplies made to non-members was not
permissible under EU law.
The European Court of Justice (CJEU) found that where a supply
is made by a non-profit making body it is immaterial whether it is
provided to a member of the body or a visitor. It took the view that a
Member State has no power to exclude certain groups of recipients of
services from the benefit of the exemption -'additional income' could
not be construed in such a way that it would lead to such a restriction
in the scope of the exemption.
The CJEU also rejected the argument that the exclusion of
supplies to non-members was permissible on the basis that it had the
effect of reducing distortion of competition between members clubs and
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 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.
Claimants who intend to reimburse non-members need to ensure
that their claim is adjusted to reflect any over claim of input tax by
application of their partial exemption and/or capital goods scheme
calculations as appropriate before advising HMRC they wish to proceed
under Phase 1.
HMRC will meet eligible claims under the terms of sections 9
& 10 of Notice 700/45 providing the conditions are met. HMRC
reserves the right to examine the quantum of the claim, including the
requirement to apply revised partial exemption and capital goods scheme
calculations as appropriate. All Phase 1 claims should be sent to the
VAT Bridport Claims S0483
PO Box 200
II. Phase 2. Clubs that do not adopt
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
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
Rejected claims that were appealed to the First Tier Tribunal,
however, are still open.
If a claimant wishes to claim any additional amounts in
respect of non-members that were either overlooked or the result of
calculation errors for accounting periods in the original claim, that
claim can be amended. However, this only applies where the amendment
is, for example, the correction of an arithmetical error or the
inclusion of elements, non-members, etc. that were within the
contemplation of the original claim. If the claimant wishes to claim
for something not within the contemplation of the previous claims or
for new accounting periods, a new claim will need to be submitted just
for these items.
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 new claims should be sent to the same address as for Phase
1 claims above.
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
Who can I contact for further information?
For further information please contact the VAT Helpline on
telephone: 0300 200 3700.
The Helpline is available from 8.00am to 6.00pm, Monday to
If you have hearing difficulties, please ring the Textphone
service on telephone: 0300 200 3719.
About the Author
© Crown Copyright 2014.
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Article Published/Sorted/Amended on Scopulus 2014-06-30 10:11:26 in Tax Articles